Answered

At Westonci.ca, we provide clear, reliable answers to all your questions. Join our vibrant community and get the solutions you need. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform. Get immediate and reliable solutions to your questions from a community of experienced professionals 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%)

Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Stay curious and keep coming back to Westonci.ca for answers to all your burning questions.