A private investment club has $ 200,000 earmarked for investment in stocks. The

Question

A private investment club has $ 200,000 earmarked for investment in stocks. The management is considering three categories; high risk, medium risk, and low risk. High risk stocks will have a rate of return of 15% / year; medium risk stocks 10% / year; and low - risk stocks, 6% / year. The members have decided that the investment in low risk stock should be equal to the sum of the investments in the stocks of the other two categories. Determine how much the club should invest in each type of stock if the investment goal is to have a return of $ 20,000 / year on the total investment . (assume that all the money available for investment is invested.)

***hint : form a 3 x 3 system of equations with X, Y and Z, and then solve using any method.

Explanation / Answer

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