Basic maths help please

[SlowMoped]

Hi everyone,

I'm struggling with some maths which is part of some preparation that I am doing for an exam. Please could anyone assist?

Here is the problem:

Investment A has an expected return of 8%
Investment B has an expected return of 25%

The required return is 15%

Use the data to calculate the weightings in each asset to achieve 15% expected return.

I've had this explained to me like this, but I can't follow the steps. Please could someone break it down further for me?

W(8) + (1-W) (25) = 15

8W +25 - 25W = 15

8W-25W = 15-25

-17W = -10

17W=10

W=10/17

Weight in A = 59%, 41% in B

Many thanks

[Captain Smerc]

MX-5 ?

[CaptainSlow]

Which bit are you struggling with?

[Donbot]

It's using linear algebra to say that (for eg) two lots of something plus 3 lots of something has to equal some number. The W is the interest representing each lot and you are making them equal.

Edit: looking through the maths it doesn't make sense to me either

Edited by Donbot on Thursday 5th October 21:13

[SlowMoped]

specifically the second line, how do we get 2 lots of 25

[Donbot]

Expanding the brackets

[Benrad]

It's an expansion of (1-W)(25)

You have to multiply both parts of the first bracket by the second bracket. So:

1 x 25 - W x 25 which gives 25 - 25W

Any better?

[languagetimothy]

SlowMoped said:

Hi everyone,

I'm struggling with some maths which is part of some preparation that I am doing for an exam. Please could anyone assist?

Here is the problem:

Investment A has an expected return of 8%
Investment B has an expected return of 25%

The required return is 15%

Use the data to calculate the weightings in each asset to achieve 15% expected return.

I've had this explained to me like this, but I can't follow the steps. Please could someone break it down further for me?

W(8) + (1-W) (25) = 15

8W +25 - 25W = 15

8W-25W = 15-25

-17W = -10

17W=10

W=10/17

Weight in A = 59%, 41% in B

Many thanks

If overall they want 15pct return then that 59/41 split does ir... roughly...

59pct of 8 is 4.72
41pct of 25 is 10.25
Total 14.97 so may have to work out fractional percentage to hit a round 15pct


If that is the question


Hopefully that means that A has a bigger position value than B.
So A at 4.72pct has an investment return bigger than B at 10.25pct because its a higher
Value asset....maybe

But I could be reading it wrong.... don't take my word for it!!

[ApOrbital]

1 x 25 - W x 25=iceland frozen sausages hammered in the garden.

[Algarve]

Captain Smerc said:

MX-5 ?

At any point before hitting submit did you think that was either funny, or added anything?

Its up there with frozen sausages, it should be an instant 7 day ban and let that old unfunny joke die (dis)gracefully.

[Wacky Racer]

Algarve said:

At any point before hitting submit did you think that was either funny, or added anything?

Its up there with frozen sausages, it should be an instant 7 day ban and let that old unfunny joke die (dis)gracefully.

I thought it was funny....

Lighten up......

[TooMany2cvs]

SlowMoped said:

8W-25W = 15-25

I dunno where you're buying your engine oil from, but I think they're taking you for a ride.

[Captain Smerc]

Algarve said:

At any point before hitting submit did you think that was either funny, or added anything?

Its up there with frozen sausages, it should be an instant 7 day ban and let that old unfunny joke die (dis)gracefully.

It worked on you

[Halmyre]

SlowMoped said:

Hi everyone,

I'm struggling with some maths which is part of some preparation that I am doing for an exam. Please could anyone assist?

Here is the problem:

Investment A has an expected return of 8%
Investment B has an expected return of 25%

The required return is 15%

Use the data to calculate the weightings in each asset to achieve 15% expected return.

I've had this explained to me like this, but I can't follow the steps. Please could someone break it down further for me?

W(8) + (1-W) (25) = 15

8W +25 - 25W = 15

8W-25W = 15-25

-17W = -10

17W=10

W=10/17

Weight in A = 59%, 41% in B

Many thanks

W is a fraction; if you invest 0.25 in A, you've got 0.75 left for B; in this case W = A = 0.25 and B = 0.75 = (1 - A) = (1 - W).

When you finally end up with W = 10/17, that's 59% (rounded up) = 0.59 to invest in A, so leaving (1 - W) = 0.41 to invest in B.

[Algarve]

Wacky Racer said:

I thought it was funny....

Lighten up......

If you find it funny didn't it stop being funny the first 5000 times

[HughG]

languagetimothy said:

SlowMoped said:

Hi everyone,

I'm struggling with some maths which is part of some preparation that I am doing for an exam. Please could anyone assist?

Here is the problem:

Investment A has an expected return of 8%
Investment B has an expected return of 25%

The required return is 15%

Use the data to calculate the weightings in each asset to achieve 15% expected return.

I've had this explained to me like this, but I can't follow the steps. Please could someone break it down further for me?

W(8) + (1-W) (25) = 15

8W +25 - 25W = 15

8W-25W = 15-25

-17W = -10

17W=10

W=10/17

Weight in A = 59%, 41% in B

Many thanks

If overall they want 15pct return then that 59/41 split does ir... roughly...

59pct of 8 is 4.72
41pct of 25 is 10.25
Total 14.97 so may have to work out fractional percentage to hit a round 15pct


If that is the question


Hopefully that means that A has a bigger position value than B.
So A at 4.72pct has an investment return bigger than B at 10.25pct because its a higher
Value asset....maybe

But I could be reading it wrong.... don't take my word for it!!

The way I read it, the answer they are looking for is 59% of A:41% of B which an overall return of 15%.

[SystemParanoia]

Stick it all into investment B and pocket the 10% ?

[MrBarry123]

Wacky Racer said:

I thought it was funny....

Lighten up......

And me.