Quantitative Aptitude Quest
Stocks and Shares
A pension fund has a total of $1 million invested in stock of the ABC Company and bonds of the DEF Corporation. The ABC stock yields 12% in cash each year, and the DEF bonds pay 10% in cash each year. The pension fund received a total of $115,000 in cash from ABC stock and DEF bonds last year. How much money was invested in ABC stock?
1. $750,000.00
2. $600,000.00
3. $500,000.00
4. $333,333.
33Let s be the amount invested in ABC stock and b be the amount invested in DEF bonds. Then s + b = 1,000,000 and .12s + .10b = 115,000. Solves s + b = 1,000,000 for b and you get b = 1,000,000 - s. Now substitute this into the second equation. The result is .12s + .10(1,000,000 - s) = .12s - .10s + 100,000 = 115,000. So .02s = 15,000, which gives s = 15,000/.02. Therefore, s = $750,000