A Money Manager Invests $\$ 1,000,000$ Of Her Client's Money into Three Types of Funds

question 84

Essay

A money manager invests $\$ 1,000,000$ of her client's money into three types of funds. It's estimated that Fund A will return $2 \%$ over the next year, Fund B $5 \%$ , and Fund C $11 \%$ . She decides to invest equal amounts in Fund A and Fund B and her client hopes to get a $\$ 45,500$ annual return. How much should she invest at each rate?

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Definitions:

Net Income

The amount of money a company earns after subtracting all expenses, taxes, and losses, indicating the company's profitability over a time period.

Net Capital

The amount of capital that a company has after subtracting its liabilities from its assets, often used in financial analysis to assess a company's financial health.

Revised Model Business Corporation Act

A model law proposed to standardize and regulate corporate business activities in the United States.

Negative Book Value

A situation where a company's liabilities exceed its assets, resulting in a negative equity value on the balance sheet.