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An investment firm offers three types of equity Investments, A, B, and C. Of the firm's clients, 30% invest in A, 50% Invest in B, and 20% Invest in
C. The rates of return are 10%, 6%, and 7% for A, B, and C, respectively. What is the expected value of the total return rate for the firm's clients?
A. 6.2%
B. 7.1%
c. 7.4%
D.8.2%

Answer :

calculista

Answer:

Option c. 7.4%

Step-by-step explanation:

Let

x -----> the expected value of the total return rate for the firm's clients

we know that

The sum of the percentage rates of return multiplied by each percentage of the firm clients in decimal form must be equal to the expected percentage value of the total return rate

Convert the percentage of the firm clients in decimal form

[tex]30\%=30/100=0.30[/tex]

[tex]50\%=50/100=0.50[/tex]

[tex]20\%=20/100=0.20[/tex]

[tex]x=10\%(0.30)+6\%(0.50)+7\%(0.20)[/tex]

Solve for x

[tex]x=3\%+3\%+1.4\%[/tex]

[tex]x=7.4\%[/tex]

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