The management of a private investment club has a fund of $130,000 earmarked for investment in...

 

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The management of a private investment club has a fund of $130,000 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 (x), medium risk (y), and low risk (2). Management estimates that high risk stocks will have a rate of return of 15%/year medium risk stocks, 10%/year; and low risk stocks, 6%/year. The investment in low risk stocks is to be twice the sum of the investments in stocks of the other two categories. If the Investment goal is to have a rate of return of 9% on the total investment, determine how much the club should invest in each type of stock. (Assume that all the money available for Investment is invested.) 130,000 -2 11,700 The management of a private investment club has a fund of $130,000 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 (x), medium risk (y), and low risk (2). Management estimates that high risk stocks will have a rate of return of 15%/year medium risk stocks, 10%/year; and low risk stocks, 6%/year. The investment in low risk stocks is to be twice the sum of the investments in stocks of the other two categories. If the Investment goal is to have a rate of return of 9% on the total investment, determine how much the club should invest in each type of stock. (Assume that all the money available for Investment is invested.) 130,000 -2 11,700

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Lets solve the problem step by step Step 1 Define the variables Let x investment in highrisk stocks ... View the full answer