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Two investment portfolios are shown with the amount of money placed in each investment and the Rate of Return (ROR).

\begin{tabular}{|l|l|l|l|}
\hline \multicolumn{1}{|c|}{Investment} & Portfolio 1 & Portfolio 2 & \multicolumn{1}{c|}{ROR} \\
\hline Tech Company Stock & [tex]$\$[/tex] 2,800[tex]$ & $[/tex]\[tex]$ 1,275$[/tex] & [tex]$4.99 \%$[/tex] \\
\hline Government Bond & [tex]$\$[/tex] 3,200[tex]$ & $[/tex]\[tex]$ 2,200$[/tex] & [tex]$6.87 \%$[/tex] \\
\hline Junk Bond & [tex]$\$[/tex] 950[tex]$ & $[/tex]\[tex]$ 865$[/tex] & [tex]$-3.12 \%$[/tex] \\
\hline Common Stock & [tex]$\$[/tex] 1,500[tex]$ & $[/tex]\[tex]$ 1,700$[/tex] & [tex]$9.59 \%$[/tex] \\
\hline
\end{tabular}

Which portfolio earns the most, and by how much?

A. Portfolio 1 earns [tex]$\$[/tex] 128.27[tex]$ more.
B. Portfolio 2 earns $[/tex]\[tex]$ 128.27$[/tex] more.
C. Portfolio 1 earns [tex]$\$[/tex] 122.97$ more.



Answer :

GinnyAnswer
Let's break down the detailed solution step by step.

### Portfolio 1 Calculation
1. Tech Company Stock:
- Amount: [tex]$2,800 - Rate of Return (ROR): 4.99% - Earnings: \( 2,800 \times \frac{4.99}{100} \) 2. Government Bond: - Amount: $[/tex]3,200
- ROR: 6.87%
- Earnings: [tex]\( 3,200 \times \frac{6.87}{100} \)[/tex]

3. Junk Bond:
- Amount: [tex]$950 - ROR: -3.12% - Earnings: \( 950 \times \frac{-3.12}{100} \) 4. Common Stock: - Amount: $[/tex]1,500
- ROR: 9.59%
- Earnings: [tex]\( 1,500 \times \frac{9.59}{100} \)[/tex]

Summing these values gives us the total earnings for Portfolio 1.

### Portfolio 2 Calculation
1. Tech Company Stock:
- Amount: [tex]$1,275 - ROR: 4.99% - Earnings: \( 1,275 \times \frac{4.99}{100} \) 2. Government Bond: - Amount: $[/tex]2,200
- ROR: 6.87%
- Earnings: [tex]\( 2,200 \times \frac{6.87}{100} \)[/tex]

3. Junk Bond:
- Amount: [tex]$865 - ROR: -3.12% - Earnings: \( 865 \times \frac{-3.12}{100} \) 4. Common Stock: - Amount: $[/tex]1,700
- ROR: 9.59%
- Earnings: [tex]\( 1,700 \times \frac{9.59}{100} \)[/tex]

Summing these values gives us the total earnings for Portfolio 2.

### Total Earnings
After calculating we summarize:
- Total Earnings for Portfolio 1: [tex]$473.77 - Total Earnings for Portfolio 2: $[/tex]350.80

### Difference in Earnings
The difference in earnings between the two portfolios is calculated as:
[tex]\[ 473.77 - 350.80 = 122.97 \][/tex]

Therefore, Portfolio 1 earns [tex]$122.97 more than Portfolio 2. Hence, the correct answer is: Portfolio 1 earns $[/tex]122.97 more.

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