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An investor plans to put a total of \( \$ 110,000 \) in a money market account, a bond fund, an international stock fund, and a domestic stock fund. She wants \( 60 \% \) of her investment to be conservative (money market and bonds). The investor wants the amount in international stocks to be one-fourth the amount in domestic stocks. Finally, the investor needs an annual return of \( \$ 4,400 \). Assuming the investor gets annual returns of \( 2.5 \% \) on the money market account, \( 3.5 \% \) on the bond fund, \( 4 \% \) on the international stock fund, and \( 6 \% \) on the domestic stock fund, how much should the investor put in each investment? The investor should put \( \$ 28600 \) in the bond fund. (Type a whole number.) The investor should put \( \$ \square \) in the international stock fund. (Type a whole number.)

Ask by Ross Campos. in the United States
Feb 22,2025

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The investor should put \$8,800 in the international stock fund.

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Mind Expander

To solve how much the investor should put in the international stock fund and subsequently in other funds, we can break it down systematically. Let’s denote: - Money market = \( x \) - Bond fund = \( y \) (given as \( \$ 28,600 \)) - International stocks = \( z \) - Domestic stocks = \( w \) 1. **Total Investment**: \[ x + y + z + w = 110,000 \] 2. **Conservative Investment** (60%): \[ x + y = 0.6 \times 110,000 = 66,000 \] Given \( y = 28,600 \): \[ x + 28600 = 66000 \implies x = 66000 - 28600 = 37400 \] 3. **International and Domestic Stock Relationship**: \[ z = \frac{1}{4}w \implies w = 4z \] 4. **Total investment substitution**: \[ 37400 + 28600 + z + 4z = 110000 \implies 66000 + 5z = 110000 \implies 5z = 44000 \implies z = 8800 \] The investor should put \( \$ 8,800 \) in the international stock fund.

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