Your friend's portfolio manager has suggested two high-yielding stocks: Consolidated Edison (ED) and Royal Bank of Scotland (RBS-K). ED shares cost $40, yield 5.5% in dividends, and have a risk index of 1.0 per share. RBS-K shares cost $25, yield 7.5% in dividends, and have a risk index of 1.5 per share. You have up to $24,000 to invest and would like to earn at least $1,320 in dividends. How many shares (to the nearest whole number) of each stock should you purchase in order to meet your requirements and minimize the total risk index for your portfolio?
?
A. Buy 960 shares of ED and 0 shares of RBS-K
B. Buy 0 shares of ED and 600 shares of RBS-K
C. Buy 0 shares of ED and 960 shares of RBS-K
D. Buy 600 shares of ED and 0 shares of RBS-K
E. no solution
Answer: D
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