You have $15,000 to invest in a stock portfolio. Your choices are Stock X with a

Question

You have $15,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 9.5 percent. If your goal is to create a portfolio with an expected return of 12.02 percent, how much money will you invest in Stock X and Stock Y?

You have $15,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 9.5 percent. If your goal is to create a portfolio with an expected return of 12.02 percent, how much money will you invest in Stock X and Stock Y?

Explanation / Answer

let x be invested stock X

then 15000 -x is invested in Y

14% * X + (15000-x) * 9.5% = 15000* 12.02%

0.14x - 0.095x + 1425 =1803

x= 8400

hence

8400 should be invested in X

and 6600 should be invested in y

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