Answered

Discover answers to your questions with Westonci.ca, the leading Q&A platform that connects you with knowledgeable experts. Connect with professionals on our platform to receive accurate answers to your questions quickly and efficiently. Our platform provides a seamless experience for finding reliable answers from a network of experienced professionals.

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 hope this was helpful. Please come back whenever you need more information or answers to your queries. Thank you for choosing Westonci.ca as your information source. We look forward to your next visit.