QUESTION 7 Stock K is expected to return 12.4 percent while the return on Stock L is expected to be 8.6 percent. You have $10,000 to invest in these two stocks. How much should you invest in Stock L if you desire a combined return from the two stocks of 11 percent? $4,209 $3,415 $2,907 $3,684 $3,511

$3684 should be invested in stock L

Step-by-step explanation:

Let x represent the amount that you should invest in stock K.

Let y represent the amount that you should invest in stock L.

You have $10,000 to invest in these two stocks. It means that

x + y = 10000

Stock K is expected to return 12.4 percent while the return on Stock L is expected to be 8.6 percent. It means that the returns from stock K would be 12.4/100 × x = 0.124x

And the returns from stock L would be 8.6/100 × y = 0.086y

if you desire a combined return from the two stocks of 11 percent, it means that the combined returns would be

11/100 × (x + y) = 0.11(x + y)

The equation would be

0.124x + 0.086y = 0.11(x + y)- - - - - - - -1

Substituting x = 10000 - y into equation 1, it becomes

0.124(10000 - y) + 0.086y = 0.11(10000 - y + y)

1240 - 0.124y + 0.086y = 1100

- 0.124y + 0.086y = 1100 - 1240

- 0.038y = - 140

y = - 140/- 0.038

y = 3684

it would open into a square depending on the type of envelope i’m not sure about the second part