Question 1201131
<br>
The problem requires that half of the $400,000 be invested in the low-risk stocks that yield a return of 6%.  $200,000 invested at 6% yields .06($200000) = $12,000.<br>
The total return required is $40,000, so the $200,000 invested in the stocks that have returns of 10% and 15% must yield a return of $40,000-$12,000 = $28,000.<br>
A yield of $28,000 on an investment of $200,000 requires an average interest rate of $28,000/$200,000 = 0.14 = 14%.<br>
Simple mental arithmetic shows that 14% is four-fifths of the way from 10% to 15%; that means 4/5 of the remaining $200,000, or $160,000, must be invested at the higher rate.<br>
ANSWER:
$160,000 at 15%
$40,000 at 10%
$200,000 at 6%<br>
CHECK: .15($160,000) + .10($40,000) + .06($200,000) = $24,000 + $4000 + $12,000 = $40,000<br>