Quote:
Originally Posted by Saul Good
You're making this too hard. You don't have to blend all four. It's a lot easier to blend 2 and put it into a simple algebraic equation.
For example, you can use holdings 1 (x) and 3 (y).
x(8.5) + y(3.1) = 6.5% is your equation.
Now, you have to express x in terms of y. Because x+y= 100% (1.00) of your investment, x=1.00-y
Now, you re-write the equation with only the y variable:
(1-y)(8.5)+y(3.1)=6.5
Do the multiplication:
8.5-8.5y+3.1y=6.5
Simplify further
8.5-5.4y=6.5
Subtract 6.5 from both sides of the equation
2-5.4y=0
Add 5.4y to both sides
2=5.4y
Divide both sides by 5.4 to solve for y
.37=y
37% of your investment should be in y. The rest (1-y) should be in x.
Check your work: .37(.031)+.63(.085)=.065
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That's all good if he is allowed to only use 2 of the 4 options. But if he is required to use all 4 of the percentages listed, he better go with something like along the lines I provided for him.
EDIT: We are essentially doing the same thing... I just eliminated 2 of the options by giving each a 25% value. Didn't mean to come across as my way was better Saul Good! Hope you didn't take it that way.