Suppose that the year is 2059. You remember that when you were a STK114 student back in the beginning of 2009, in the midst of a recession, you had a total of R 10 000 to invest amongst the following alternatives: Allan Gray, Stanlib and Investec. You invested half of your funds in Allan Gray and the remainder equally between the other two. At the end of 2059 all your investments together were worth R 500 000, with the following:

Question

Suppose that the year is 2059. You remember that when you were a STK114 student back in the beginning of 2009, in the midst of a recession, you had a total of R 10 000 to invest amongst the following alternatives: Allan Gray, Stanlib and Investec. You invested half of your funds in Allan Gray and the remainder equally between the other two. At the end of 2059 all your investments together were worth R 500 000, with the following:

Investment House: Stanlib Allan Gray
Investment Value R 109 212.63 R 261 897.13
Looking back, which of the following is true:

A)You should have invested all your money in Investec, since this gave the best rate of return (8.2046%).

B)You should have invested all your funds in Allan Gray, since this gave an annual return over the period of 8.2389%.

C)You should have invested all your funds in Stanlib since this gave the best return over the period (8.2389%).

D)None of the above.

Answer 1

D) None of the above.

Based on the information provided, the best option would have been to split the investment as originally planned, with half in Allan Gray and the remainder split equally between Stanlib and Investec. This would have resulted in the highest combined value of R 500 000 at the end of 2059.