The Big Bull investment club has a portfolio that contains only two stocks?

February 2nd, 2010 by admin

At the end of the year, stock A had gone up 8%, and stock B had gone up 10%. The total portfolio, which had a value of $10,000 at the beginning of the year, went up 9.2%. How much is the investment in stock B?

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    • One Response to “The Big Bull investment club has a portfolio that contains only two stocks?”

    1. Mather says:
      February 2, 2010 at 3:36 am

      Let a = investment in stock A, b = investment in stock B

      We know: 1) a + b = 10000; b = 10000 - a
      2) a(1.08) + b(1.10) = 10000(1.092)
      substituting 1) into 2)
      a(1.08) + (10000 - a)(1.10) = 10000(1.092)
      1.08a + 11000 -1.10a = 10920
      80 = .02a
      a = 80/.02 = $4000
      b = 10000 - a = $6000
      Investment in stock B is $6,000

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