Question

You seek to make a 40% return on a $1,500 investment. Apple stock yields a 30% return, while Microsoft stock yields an 80% return. What is your investment in Apple stock, and what is your investment in Microsoft stock? *

Answer 1

Answer:

80% of Apple shares and 20% of Microsoft shares must be acquired.

Explanation:

To determine in what proportion each stock can be purchased, it must be determined how much profit will be obtained according to the percentage in which each stock is subscribed. Thus, acquiring 60% of Apple stocks and 40% of Microsoft, the benefit will be as follows:

((60 x 30) + (40 x 80)) / 100 = X

(1800 + 3200) / 100 = X

5000/100 = X

50 = X

Therefore, the ratio must be greater than 60/40. So, testing an 80/20, the benefit will be as follows:

((80 x 30) + (20 x 80)) / 100 = X

(2400 + 1600) / 100 = X

4000/100 = X

40 = X

Therefore, 80% of Apple shares and 20% of Microsoft shares must be acquired.