Patricia has at most $36,000 to invest in securities in the form of corporate stocks. She has narrowed her choices to two groups of stocks: growth stocks that she assumes will yield a 11% return (dividends and capital appreciation) within a year and speculative stocks that she assumes will yield a 22% return (mainly in capital appreciation) within a year. Determine how much she should invest in each group of stocks in order to maximize the return on her investments within a year if she has decided to invest at least 3 times as much in growth stocks as in speculative stocks.
A) $9,000 in growth stocks and $27,000 in speculative stocks; maximum return: $6,930
B) $27,000 in growth stocks and $9,000 in speculative stocks; maximum return: $4,950
C) $26,000 in growth stocks and $10,000 in speculative stocks; maximum return: $5,060
D) $27,000 in growth stocks and $9,000 in speculative stocks; maximum return: $6,775

Question

Quizplus · Accepted Answer

Patricia must invest at least 3 times as much in growth stocks as in speculative stocks. If she invests $27,000 in growth stocks (yielding 11% or $2,970) and $9,000 in speculative stocks (yielding 22% or $1,980), her total investment is $36,000, and her total return is $4,950, which meets her constraints and maximizes her return given the conditions.

Patricia Has at Most $36,000 to Invest in Securities in the Form