Determine how much the club should invest

Reference no: EM13189059

The management of a private investment club has a fund of $220,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high risk (x), medium risk (y), and low risk (z). Management estimates that high risk stocks will have a rate of return of 15%/year; medium risk stocks, 10%/year; and low risk stocks, 6%/year. The investment in low risk stocks is to be twice the sum of the investments in stocks of the other two categories. If the investment goal is to have an average rate of return of 9% on the total investment, determine how much the club should invest in each type of stock. (Assume that all the money available for investment is invested.)

Reference no: EM13189059

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