ASSET ALLOCATION Mr. and Mrs. Garcia have a total of $ 100 , 000 to be invested in stocks, bonds, and a money market account. The stocks have a rate of return of 12 % / year, while the bonds and the money market account pay 8 % / year and 4 % / year, respectively. The Garcias have stipulated that the amount invested in the money market account should be equal to the sum of 20 % of the amount invested in stocks and 10 % of the amount invested in bonds. How should the Garcias allocate their resources if they require an annual income of $ 10 , 000 from their investments?
ASSET ALLOCATION Mr. and Mrs. Garcia have a total of $ 100 , 000 to be invested in stocks, bonds, and a money market account. The stocks have a rate of return of 12 % / year, while the bonds and the money market account pay 8 % / year and 4 % / year, respectively. The Garcias have stipulated that the amount invested in the money market account should be equal to the sum of 20 % of the amount invested in stocks and 10 % of the amount invested in bonds. How should the Garcias allocate their resources if they require an annual income of $ 10 , 000 from their investments?
Solution Summary: The author calculates the amount invested in shares, bonds, and money market by the Garcias to obtain an annual income of 10,000.
ASSET ALLOCATION Mr. and Mrs. Garcia have a total of
$
100
,
000
to be invested in stocks, bonds, and a money market account. The stocks have a rate of return of
12
%
/
year, while the bonds and the money market account pay
8
%
/
year and
4
%
/
year, respectively. The Garcias have stipulated that the amount invested in the money market account should be equal to the sum of
20
%
of the amount invested in stocks and
10
%
of the amount invested in bonds. How should the Garcias allocate their resources if they require an annual income of
$
10
,
000
from their investments?
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