After many years of earning extremely low bank interest rates Shelley Mednick has decided to give the stock market a try. This is her first time investing and she wants to be extra cautious. She has heard that a new stock offering from TCS a telecommunication company is being sold at $55 per share (including commissions) and is projected to sell at $ 68 per share in a year. She is also considering a mutual fund MFI which one financial newsletter predicts will yield a 9% return over the next year. For this first venture into the market Shelley has set extremely modest goals. She wants to invest just enough so that the expected return on her investment will be $250. Furthermore since she has more confidence in the performance of the mutual fund than the stock she has set the restriction that the maximum amount invested in TCS is not to exceed 40% of her total investment or $750 whichever is smaller. What combination of shares of TCS and investment in MFI is necessary for Shelley to meet her goal of a projected $250 gain for the year.

Answer rating: 100% (QA)

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