Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A private investment club has $ 4 , 0 0 0 earmarked for investment in stocks. To arrive at an acceptable overall level of risk,

A private investment club has $4,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high risk, medium risk, and low risk. Management estimates that high-risk stocks will have a rate of return of 18%/year; medium-risk stocks, 9%/year; and low-risk stocks,4%/year. The members have decided that the investment in low-risk stocks should be a quarter of the sum of the investments in the stocks of the other two categories.
Assuming that all the money available for investment is invested, how much should the club invest in each type of stock if the investment goal is to have a return of $373/year on the total investment?
(Round your answer to 2 decimal places)
The club should invest $ _______
,$ ______ and $ ______ in high risk, medium risk and low risk stocks completely.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Personal Finance

Authors: Sally R. Campbell, Robert L. Dansby

9th Edition

1619603578, 9781619603578

More Books

Students also viewed these Finance questions