Leticia has been tracking two volatile stocks stock a over...

Leticia has been tracking two volatile stocks. Stock A over the last year has increased $10 \%,$ and stock $\mathrm{B}$ has increased $14 \%$ (using a simple interest model). She has $\$ 10,000$ to invest and would like to split it between these two stocks. If the stocks continue to perform at the same rate, how much should she invest in each for one year to result in a balance of $\$ 11,260 ?$

Transcript

00:01 All right so we have a person who would be investing $10 ,000 right into two investments which have an interest rate of 10 % and 14%.

00:24 So the question is if the investor wants to earn a total interest right of 11 ,360 in a year, all right, how much should we invest at each investment rate? right.

00:43 Okay.

00:44 So one important thing to remember here is that this, right, would just be computed using a simple interest formula.

00:59 All right, so this is as opposed to compound interest.

01:05 However, in the span of one year, the effects of a compound interest is pretty similar to that of a simple interest.

01:17 All right.

01:18 Okay.

01:19 So let's try to solve this now.

01:21 All right.

01:21 So the person has two investments.

01:25 Two, yeah, the person wants to invest in.

01:28 Investor wants to invest in two interest rates, right? one at 10%, one at 14%.

01:37 All right.

01:42 So here we have 10%.

01:43 10 % and here we have 14 % all right okay all right so the question is how much is you investing in both all right so we don't know that all we do know is that the total investment right the total investment has to be 10 ,000 all right so because we don't know either let's say this investor would invest x dollars 10 % and then the rest at the 14 % interest rate all right so since the total investment is 10 ,000 then we definitely can represent the amount invested in the 14 % rate as 10 ,000 right minus how much was invested on the 10 % interest rate all right okay all right so right the interest earn the interest earn could simply be, all right, the amount invested multiplied by the interest rate.

03:05 So if he invests x dollars on the 10 % investment rate, you multiply 10 % with x, which we get 0 .10x.

03:15 That would be how much interest he earns, all right, on the 10 % investment.

03:21 On the 14 % investment, we just multiply 14 % with how much was invested here, which is 10 ,000 minus x.

03:35 All right.

03:36 Okay.

03:37 All right.

03:37 Then so if we have this, how much would be the total interest earned? right.

03:43 The investor had $10 ,000 in the beginning.

03:48 So if the investor wants to earn or wants to get $11 ,260 after a year, so therefore, the total interest earned would just be the difference between how much you would like to have at the end of the year.

04:05 Less the amount of money he had for that year.

04:09 So 11 ,260 minus 10 ,000, this gives us 1 ,260...

Question

Please give Ace some feedback