Masood places part of Rs. 12000 into a 12% stock priced at Rs. 120 and the balance into a 15% stock priced at Rs. 125. If yearly returns total Rs. 1360, what capital was allocated to the 12% stock at Rs. 120?
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Answer: D. Rs 4000
Explanation
Setting up an algebraic allocation equation splits twelve thousand rupees across the two different stock investments. Calculating the annual return from each stock investment based on their market pricing and dividend rates. Solving the combined return equation confirms that exactly four thousand rupees was allocated to the first stock. Stock investments generate annual income determined by the dividend rate and the amount of capital invested. Market price determines how many shares are purchased for a given sum of invested capital money. Simultaneous allocation problems require balancing total capital against combined income constraints.
Portfolio managers diversify investments across multiple asset classes to balance risk and annual income. Financial planners use allocation equations to determine optimal funding levels for retirement accounts. Solving stock investment problems bridges theoretical algebra and practical portfolio management concepts. Option A overestimates the capital allocated to the first stock, violating the total income equation. Option B allocates too much capital to the first stock, resulting in an income higher than thirteen sixty. Option C creates an investment imbalance that fails to satisfy the combined yearly return total.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
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