Formulate but do not solve the problem.
A private investment club has $250,000 earmarked for investment
in stocks. To arrive at an acceptable overall level of risk, the
stocks that management is considering have been classified into
three categories: high-risk, medium-risk, and low-risk. Management
estimates that high-risk stocks will have a return rate of
15%/year; medium-risk stocks, 10%/year; and low-risk stocks,
6%/year. The members have decided that the investment in low-risk
stocks should be equal to the sum of the investments in the stocks
of the other two categories. Determine how much the club should
invest in each type of stock if the investment goal is to have a
return of $25,000/year on the total investment. (Assume that all
the money available for investment is invested. Let x, y, and z
denote the amount, in dollars, invested in high-, medium-, and
low-risk stocks, respectively.)
____=250,000
____= z
____=25,000