Smart People: Help me do math homework

[Jenson71]

How would a person begin to answer this problem?

What mix or set of mixes of these individual assets will provide a 6.5% return?

Name

Expected Return

Holding 1

8.50%

Holding 2

9.20%

Holding 3

3.10%

Holding 4

4.80%

[Jenson71]

Originally Posted by cdcox

Knowing La Lit, I'm pretty sure its not. He's a word geek, not a numbers geek.

Thank you for that. In nearly every situation, you would be correct. However, I'm taking Wealth Management this semester in a foray back to undergrad classes. Being my last semester at law school, I can afford to take a relaxed schedule. I wanted to take this course (along with espanol) because I know that clients will ask me about the issues in estate planning, and I wanted to have some idea of good financial investment options. I'm really enjoying it so far, but the minor amount of math involved is an obstacle, unfortunately. I can figure out basic things like what savings total at retirement is necessary for a person who wants xK per year to live on, but aside from that, I'm a fish out of water.

[Jenson71]

Originally Posted by KC native

Ugh efficient frontier is such a flawed concept. They finally dropped it from the CFA curriculum.

Not saying your wrong, just nitpicking about my least favorite part of portfolio management theory in modern finance.

It seems like each investment firm develops their own efficient frontier portfolio.

[Coogs]

Originally Posted by La literatura

Thank you for that. In nearly every situation, you would be correct. However, I'm taking Wealth Management this semester in a foray back to undergrad classes. Being my last semester at law school, I can afford to take a relaxed schedule. I wanted to take this course (along with espanol) because I know that clients will ask me about the issues in estate planning, and I wanted to have some idea of good financial investment options. I'm really enjoying it so far, but the minor amount of math involved is an obstacle, unfortunately. I can figure out basic things like what savings total at retirement is necessary for a person who wants xK per year to live on, but aside from that, I'm a fish out of water.

I hate to be an asshat, but given the limited amount of information you gave in the OP, it seems as if a few more thank you's besides the one you just gave would be in order.

[Jenson71]

Yes, thank you. Rep on the way. That was all the info I was given.

Turns out most students have some Solver program on Excel, which I've since added but have no idea how to use. So I'll probably be sticking with these formulas you and others have provided.

[Coogs]

Originally Posted by La literatura

Yes, thank you. Rep on the way. That was all the info I was given.

Turns out most students have some Solver program on Excel, which I've since added but have no idea how to use. So I'll probably be sticking with these formulas you and others have provided.

You're welcome! I realize the answer I gave you was pretty much basic algebra in step-by-step, but it will work for any amount of money you wish to invest.

Hope you get an A.

[cdcox]

It's cool that you are stretching yourself trying to develop a working knowledge of something out of your comfort zone. I've always wanted to learn to play guitar or piano (music doesn't come easy for me), but my hands seem to be the fastest aging part of my body, so that isn't happening.

[Saul Good]

Originally Posted by Coogs

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.

If you have to use all four, simply divide the percentages in half, do the same thing for options 1 and 2, and add them together.

Standard algebra is really all that is needed here, and it's about a 30 second solution. I don't feel like math instructors do a good enough job of translating their teachings into practical applications. There really isn't any point in learning algebra if you don't know how to apply it. If you do, it's actually extremely useful and comes in handy a lot more often than most people probably realize.

Then, when you use it, people look at you like you just explained string theory even though you're just really busting out something you learned in 7th grade.