Optimizing Investment Returns

How can Ed Moura optimize his investment returns?

Ed Moura has $56,000 invested in stocks paying 8%. How much additional money should he invest in certificates of deposit paying 3% so that the average return on the two investments is 4%?

Final answer:

To optimize his investment returns, Ed Moura should invest an additional amount in certificates of deposit according to the calculated value.

Ed Moura can optimize his investment returns by strategically allocating his funds between stocks and certificates of deposit. By finding the right balance between the two investments, he can achieve a desired average return while minimizing risk.

Explanation:

To determine how much additional money Ed Moura should invest in certificates of deposit, we use the equation for average return:

(amount invested in stocks * interest rate) + (amount invested in certificates of deposit * interest rate) = total investment * average return

By plugging in the given values and solving the equation, we can calculate the additional amount needed for optimum returns.

Investing wisely is key to maximizing returns and achieving financial goals. By understanding the principles of diversification and risk management, individuals can make informed decisions to grow their investments over time.