Question

"Suppose you receive an inheritance of $28,000. You decide to invest in stocks and bonds. To diversify, you decide that three times the amount in bonds should equal four times the amount in stocks. How much should be invested in bonds? How much should be invested in stocks?"

Answer 1

OK. Simple investment diversification problem. Here's what we know from the word problem.

Let S = $ amount in Stocks
Let B = $ amount in Bonds
$28,000 = total investment
S + B = $28,000
3B = 4S

Solve for B
3B/4 + B = 28,000
3B + 4B = 112000 - Clearing fractions
7B = 112000
B= 16000

Solve for S
B + S = 28,000
16000 + S = 28000 - Substitute in the B
S = 12,000

Check your work
3B = 4S ?
3(16000) = 4(12000) ?
48,000 = 48,000 ?
YES

$16,000 will be invested in Bonds, while $12,000 will be invested in stocks.

Answer 2

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