A few days ago
Andy

Math Question?

Consider an investor with a portfolio totaling

$500000 that is invested in certificates of de-

posit, municipal bonds, blue-chip stocks, and

growth or speculative stocks.

The certificates of deposit pay 7% annually,

and the municipal bonds pay 3% annually.

Over a 5-year period, the investor expects the

blue-chip stocks to return 11% annually and

the growth stocks to return 13% annually.

The investor wants a combined annual return

of 10% and also wants to have only one-fourth

of the portfolio invested in stocks.

a) If he invests $100000 in growth or spec-

ulative stocks, how much will be invested in

blue chip stocks? Answer in units of dollars.

b) Find the amount invested in municipal bonds. Answer in units of dollars.

c) Find the amount invested in certificates of

deposit. Answer in units of dollars.

Top 2 Answers
A few days ago
Anonymous

Favorite Answer

.the guy want to invest 1/4 of his money in stock ,that is 500000/4 =125000$

he invested 100000$ in the growth fund and the rest in the blue chips

so 125000-100000=25000$ ( in blue chips )

now the investor want 10 / cent profit = 500000 x 1/10 =50000$

profit from growth fund =13/100 x 100000=13000$

profit fm . blue chips =11/100 x 25000 =2750 $

now we have to found the total money invested in the cer . of deposit + the municipal bond=500000-125000=375000$

or 3/4 x 500000 =375000$

the guy want to fulfill 10/ cent ..or 50000$

he got 13000 fm growth fund + 2750 $ fm blue chips fund total of 15750 $

so he need 50000- 15750 =34250 $ more fm other 2 funds

there is something wrong because even if he invested all the money left in the higher return fund he will not get the interest need ( he need 34250$ ) and he have 375000$to invest it..say he will invest in the cert. of deposit so

375000 x 7 / 100 = 26250$ only ..short by 34250 – 26250 =8000$ shortedge

now i know what is wrong .. i make it in one year not five , i have to start it all over again

No but again you ask for( annual ) return of 10 % which is 50000$ .. so i am confused again

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A few days ago
Tom T
May god have mercy on your soul.
2