Answered

Discover the answers to your questions at Westonci.ca, where experts share their knowledge and insights with you. Ask your questions and receive precise answers from experienced professionals across different disciplines. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

An investor has up to $250,000 to invest in two types of investments. Type A pays 6% annually and type B pays 8% annually. To have a well-balanced portfolio, the investor imposes the following conditions. At least one-fourth of the total portfolio is to be allocated to type A investments and at least one-fourth of the portfolio is to be allocated to type B investments. What is the optimal amount that should be invested in each type of investment

Sagot :

anthougo

Answer:

The optimal amount that should be invested in each type of investment is:

Project A (43%) = $107,500

Project B (57%) = $142,500

Explanation:

a) Data and Calculations:

Total investible funds = $250,000

Types of investment vehicles =         Type A                  Type B

Annual returns from each vehicle         6%                         8%

Ratio of annual returns =                       43%(6/14)           57% (8/14)

Therefore, allocation to each type:

Type A =  $107,500 ($250,000 * 43%)  

Type B = $142,500 ($250,000 * 57%)

We hope our answers were useful. Return anytime for more information and answers to any other questions you have. We appreciate your time. Please come back anytime for the latest information and answers to your questions. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.