You have $90,000 for investment. You will invest S dollars in stocks and B dollars in bonds. You expect a 10% return on stocks and a 2% return on bonds. You want a total return of 5% on your investment. (a) The dollar amount of the total return is 0.05 ✕ 90,000 = $4500. What is the dollar amount of return for stocks, and what is the dollar amount for bonds? (Suggestion: Your answers will involve the variables S and B.) stocks dollars bonds dollars (b) Write a system of two equations in two unknowns that determines how much will be invested in each category. (Suggestion: One equation should show the total amount invested. The second equation should show the total dollar return.) S + B = 4500 .10S + .02B = 90,000 S + B = 4500 .02S − .10B = 90,000 S + B = 90,000 .10S + .02B = 4500 S + B = 90,000 .10S − .02B = 4500 S + B = 4500 .02S + .10B = 90,000 (c) Solve the system from part (b) to find the amount invested in stocks and the amount invested in bonds. stocks$ bonds$
You have $90,000 for investment. You will invest S dollars in stocks and B dollars in bonds. You expect a 10% return on stocks and a 2% return on bonds. You want a total return of 5% on your investment. (a) The dollar amount of the total return is 0.05 ✕ 90,000 = $4500. What is the dollar amount of return for stocks, and what is the dollar amount for bonds? (Suggestion: Your answers will involve the variables S and B.) stocks dollars bonds dollars (b) Write a system of two equations in two unknowns that determines how much will be invested in each category. (Suggestion: One equation should show the total amount invested. The second equation should show the total dollar return.) S + B = 4500 .10S + .02B = 90,000 S + B = 4500 .02S − .10B = 90,000 S + B = 90,000 .10S + .02B = 4500 S + B = 90,000 .10S − .02B = 4500 S + B = 4500 .02S + .10B = 90,000 (c) Solve the system from part (b) to find the amount invested in stocks and the amount invested in bonds. stocks$ bonds$
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You have $90,000 for investment. You will invest S dollars in stocks and B dollars in bonds. You expect a 10% return on stocks and a 2% return on bonds. You want a total return of 5% on your investment.
(a) The dollar amount of the total return is
0.05 ✕ 90,000 = $4500. What is the dollar amount of return for stocks, and what is the dollar amount for bonds? (Suggestion: Your answers will involve the variables S and B.)
stocks dollars
bonds dollars
(b)
Write a system of two equations in two unknowns that determines how much will be invested in each category. (Suggestion: One equation should show the total amount invested. The second equation should show the total dollar return.)
|
||
S + B | = | 4500 |
.10S + .02B | = | 90,000 |
|
|
||
S + B | = | 4500 |
.02S − .10B | = | 90,000 |
|
|
||
S + B | = | 90,000 |
.10S + .02B | = | 4500 |
|
|
||
S + B | = | 90,000 |
.10S − .02B | = | 4500 |
|
|
||
S + B | = | 4500 |
.02S + .10B | = | 90,000 |
|
(c)
Solve the system from part (b) to find the amount invested in stocks and the amount invested in bonds.
stocks$ bonds$
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