Person 1 and Person 2 invest in three mutual funds A, B and C. The amounts they invest in each of these mutual funds are...

Question

Person 1 and Person 2 invest in three mutual funds A, B and C. The amounts they invest in each of these mutual funds are given in the table.

| | Mutual fund A | Mutual fund B | Mutual fund C |
|---|---|---|---|
| Person 1 | 10,000 | 20,000 | 15,000 |
| Person 2 | 20,000 | 10,000 | 15,000 |

At the end of one year, the total amount that Person 1 gets is Rs. 500 more than Person 2. The annual rate of return for the mutual funds B and C is 15% each. What is the annual rate of return for mutual fund A?
A. 7.5%
B. 10%
C. 15%
D. 20%

Accepted Answer

10% Person 1 and Person 2 invest different amounts in the same three mutual funds. After one year, the return from each fund equals (amount invested * annual rate). Person 1's total return exceeds Person 2's total return by Rs. 500. Since B and C both earn 15%, we can compute and cancel those terms, leaving a single linear equation in the unknown rate r_A.