A Woman Has $445,000 Invested in Two Rental Properties

question 71

Multiple Choice

A woman has $445,000 invested in two rental properties. One yields an annual return of 10% of her investment, and the other returns 12% per year on her investment. Her total annual return from the two investments is $47,000. Let x represent the amount of the 10% investment and y represent the amount of the 12% investment. Find how much is invested in each property by solving the equations for the total amount invested and the return from each property. ​

• A)$111,250 at 10% and $360,000 at 12%
• B)$320,000 at 10% and $125,000 at 12%
• C)$110,000 at 10% and $85,000 at 12%​
• D)$360,000 at 10% and $125,000 at 12%
• E)$85,000 at 10% and $110,000 at 12%

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Definitions:

Capital Allocation Line

A graph that shows the risk-return trade-off of investable assets, indicating the most efficient portfolio possible given a certain level of risk.

Standard Deviation

Standard deviation quantifies the variation or spread of a set of numbers from its mean, highlighting the volatility or risk associated with a financial instrument or investment.

Risk-Free Asset

An investment guaranteed to return the original investment without any loss, typically associated with high-grade government securities.

Indifference Curve

In economics, a curve that represents different combinations of goods or services among which a consumer is indifferent, showing preferences.