Question

An investor has $300,000 to invest in two types of investments. Type A pays 4% annually and type B pays 5% annually. To have a well-balanced portfolio, the investor imposes the following conditions. At least one-third of the total portfolio is to be allocated to type A investments and at least one-third of the portfolio is to be allocated to type B investments. What is the optimal amount that should be invested in each investment?

Answer 1

0.04($300.000(1/3)=0.04(100.000)
Plan A=$4000
0.05(300.000-100.000)
0.05(200.000)
Plant B=$10.000

Answer 2

Ok so I had something similar to this but the answers I can choose from don't match....

Answer 3

you would want to have as much as possible in type B because it pays more. The most you could have is $200,000 due to the condition. So it is $100,000 to type A and $200,000 to type B

Answer 4

My answer choices are:
A.$100,000 in type A (4%), $200,000 in type B (6%)
B. $0 in type A (4%), $300,000 in type B (6%)
C.$200,000 in type A (4%), $100,000 in type B (6%)
D.$300,000 in type A (4%), $0 in type B (6%)
E.$110,000 in type A (4%), $190,000 in type B (6%)

Answer 5

Yeah its A

Answer 6

Ok so how did you come up with those numbers....

Answer 7

because I have another problem:
An investor has $600,000 to invest in two types of investments. Type A pays 7% annually and type B pays 9% annually. To have a well-balanced portfolio, the investor imposes the following conditions. At least one-third of the total portfolio is to be allocated to type A investments and at least one-third of the portfolio is to be allocated to type B investments. What is the optimal amount that should be invested in each investment?
I am assuming then it is the same scenario so my choices would either be:
a.$200,000 in type A (7%), $400,000 in type B (9%)
b.$210,000 in type A (7%), $390,000 in type B (9%)

Answer 8

?

Answer 9

Nevermind I figured it out thanks anyways