Stock K is expected to return 12.4 percent while the return on Stock L is expected to be 8.6 percent.You have $10,000 to invest in these two stocks.How much should you invest in Stock L if you desire a combined return from the two stocks of 11 percent?
A)$3,511
B)$4,209
C)$3,684
D)$2,907
E)$3,415

Question

Quizplus · Accepted Answer

Let x be the amount invested in Stock L. Then, the amount invested in Stock K is $10,000 - x.

The expected combined return can be expressed as:

0.124($10,000 - x) + 0.086x = 0.11($10,000)

Solving for x, we get:

x = $3,684.21

So, the best choice is to invest $3,684.21 in Stock L, and the remaining amount ($6,315.79) in Stock K.

Therefore, the answer is (C).

Stock K Is Expected to Return 12