Suppose that your long-lost Aunt Sara has left you an unexpected inheritance of $18,750.

You have decided to invest the money rather than spend it on frivolous purchases. Your financial advisor has recommended that you diversify by placing some of the money in stocks and some in bonds. Based upon current market conditions, she has recommended that the amount in bonds should equal one -fourth of the amount invested in stocks. How much should be invested in stocks? How much should be invested in bonds?

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Mathematics

27 July, 02:33

Suppose that your long-lost Aunt Sara has left you an unexpected inheritance of $18,750.

You have decided to invest the money rather than spend it on frivolous purchases. Your financial advisor has recommended that you diversify by placing some of the money in stocks and some in bonds. Based upon current market conditions, she has recommended that the amount in bonds should equal one -fourth of the amount invested in stocks. How much should be invested in stocks? How much should be invested in bonds?

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Answers (1)

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Aniya Brandt · Answer 1

Total given = $18,750

Invested in stocks and bonds.

Stocks=X

Bonds = 1/4X

Equation

X+1/4X=18,758

5X=75,000

X=75,000/5

X=15,000

Therefore ... Stock is equal to $15,000

Bonds is equal to 1/4 * 15,000.

Bond = $3,750.

To verify my answer

Stock + Bond = 18,750

15,000+3750=$18,750