Question

One safe investment pays 10% per year, and a more risky investment pays 13% per year.

a. How much must be invested in each account if an investor of $100,000 would like a return of $10,780 per year?
b. Why might the investor use two accounts rather than put all the money in the 13% investment?
is invested in the 10% account.
is invested in the 13% account.
4
b. Why might the investor use two accounts?
a. S
OA. Although the 13% account earns more interest, the 10% account has no hidden fees.
B. The 13% investment is riskier than the 10% investment. There is a greater chance the investor will lose money if it is all placed in the 13% account.
C. Investing in two accounts always yields more money than investing in just one account.

Answer 1

0.10x + 0.13y = 10780

x + y = 100000

x = 74000 --------------10%

y = 26000 --------------13% (more risky)