Natsano Has at Most $60,000 to Invest in the Common

question 71

Multiple Choice

Natsano has at most $60,000 to invest in the common stocks of two companies. He estimates that an investment in company A will yield a return of 10%, whereas an investment in company B, which he feels is a riskier investment, will yield a return of 20%. If he decides that his investment in the stocks of company A is to exceed his investment in the stocks of company B by at least $30,000, determine how much he should invest in the stocks of each company in order to maximize the returns on his investment.

• A) Investment in company A is $15,000. Investment in company B is $45,000.
• B) Investment in company A is $45,000. Investment in company B is $15,000.
• C) Investment in company A is $60,000. Investment in company B is $0.
• D) Investment in company A is $40,000. Investment in company B is $20,000.
• E) Investment in company A is $0. Investment in company B is $60,000.

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Definitions:

Individual Differences

Variations among individuals in their mental, emotional, and behavioral characteristics, often studied in psychology to understand diversity in human behavior.

Goal Neglect

A cognitive phenomenon where an individual fails to execute actions or tasks which would lead them towards their stated goals, often due to a lack of focus or attention.

Perseveration

The continuous recurrence of a specific reaction, like a word, phrase, or movement, even when the initial prompt or stimulus no longer exists.

Frontal Lobe

The part of the brain located at the front of the cerebral cortex, responsible for voluntary movement, expressive language, and managing higher level executive functions.