Question

Use the table to answer the question that follows.
ROR Portfolio 1 Portfolio 2 Portfolio 3
4.3% $3,525 $751 $965
-3.4% $800 $1,475 $3,570
9.7% $2,130 $1,155 $2,880
2.7% $1,050 $955 $3,660
11.4% $230 $1,005 $700

Calculate the weighted mean of the RORs for each portfolio. Which list shows a comparison of the overall performance of the portfolios, from worst to best?

A. Portfolio 1, Portfolio 2, Portfolio 3

B. Portfolio 2, Portfolio 1, Portfolio 3

C. Portfolio 3, Portfolio 1, Portfolio 2

D. Portfolio 3, Portfolio 2, Portfolio 1

This is the last resort :( Any help (or the answer with an explanation) would be so appreciated.

Answer 1

do you think you could reformat the table?

Answer 2

Use the attach file button

Answer 3

yes! I will do that rn.

Answer 4

@dude, @imqwerty @InsatiableSuffering

Answer 5

So we are supposed to calculate the weighted mean of the ROR's for each profile. RAte of return.
Does this mean that we calculate the percentage for each profile in each of the rate of returns and find the average?

Answer 6

I am pretty sure that is what we have to do so lets start workin!
So take 4.3% of 3525 than 4.3% of 751, than 4.3% of 965.
than -3.4% of 800, than -3.4% of 1475... (you get the idea.)
what you do is add all the values u got for profile 1 with each other, profile 2 with each other, and profile 3 with each other.
then mark the answer choice from worst to best

Answer 7

That sounds right!

Answer 8

Man I hate this so much, so much busywork math

Answer 9

Okay, that that kind of confirms what I said. So ik its a lotta calculating but you have to do that. Add up the different profile values with each other so that you have the total values for profile 1, 2 and 3. Than rank them :)

Answer 10

Is there a way I can use a vector to make this less of a pain in the butt or am I stuck doing it manually?

Answer 11

There might be another way. I am not sure of it. this might be pretty not time efficient. Is there a way your teacher has told you?

Answer 12

Not gonna lie, my teacher hasn't really taught me anything noteworthy. I've been figuring it out on my own but I haven't been able to grasp this stuff

Answer 13

Which is very unfortunate for me lol

Answer 14

\(\color{#0cbb34}{\text{Originally Posted by}}\) @rileyvc
Is there a way I can use a vector to make this less of a pain in the butt or am I stuck doing it manually?
\(\color{#0cbb34}{\text{End of Quote}}\)
are you allowed to use calculators?

Answer 15

@imqwerty yes

Answer 16

you could use matrix multiplication to make calculations a bit easier

Answer 17

@imqwerty I haven't used matrices since taking statistics :|

Answer 18

You may check it out if you want, it's convenient when you have a make a lot of similar calculations like in this case we need to calculate the weighted mean three times.

All you need to do is fill in the appropriate entries in matrices and do the multiplication.

Answer 19

it does the multiplication and shows the answers in the result matrix

Answer 20

another way to make calculations easier and more interesting would be to write a program to do it

Answer 21

Thank you! I'm finishing my calculations now, I'll share the answer I get.

Answer 22

Portfolio 1 = 385.555
Portfolio 2 = 234.533
Portfolio 3 = 378.095

This is what I got, I double-checked my calculations. According to this though, wouldn't worst-->best order be 2, 3, 1? But that isn't an answer I can choose. What am I missing here?

Answer 23

\(\color{#0cbb34}{\text{Originally Posted by}}\) @rileyvc
Portfolio 1 = 385.555
Portfolio 2 = 234.533
Portfolio 3 = 378.095

This is what I got, I double-checked my calculations. According to this though, wouldn't worst-->best order be 2, 3, 1? But that isn't an answer I can choose. What am I missing here?
\(\color{#0cbb34}{\text{End of Quote}}\)
@darkknight @imqwerty ?

Answer 24

There probably some calculation error. How did you calculate those values?

Answer 25

@imqwerty I did it manually the way that @darkknight suggested

Answer 26

This is my work

Answer 27

to calculate the weighted mean you have to multiply the rate with the amount in each line
add those up and then divide the total sum by the sum of amounts

Answer 28

you didn't divide by the sum of amounts

Answer 29

So I add the values of all three portfolios to get the total sum. What's the sum of amounts? I'm sorry if that's dumb

Answer 30

\(\color{#0cbb34}{\text{Originally Posted by}}\) @rileyvc
Portfolio 1 = 385.555
Portfolio 2 = 234.533
Portfolio 3 = 378.095

This is what I got, I double-checked my calculations. According to this though, wouldn't worst-->best order be 2, 3, 1? But that isn't an answer I can choose. What am I missing here?
\(\color{#0cbb34}{\text{End of Quote}}\)
what you calculated is the total returns, we can't say that portfolio1 is better than portfolio2 just by seeing their total returns. We need to see returns/$. (which is nothing but the weighted mean)

For example, a return of $100 for an amount of $100 and a return of $10 for an amount of $1. We can't directly compare $100 and $10 and say that the former is better. We need to see returns/$. So in this case that would be $100/$100 = 1 and $10/$1 = 10. So the second one is better.

What we need to do for the given question is this-

for portfolio1 -> \(\large\frac{4.3×3525÷100 − 800×3.4÷100 + 2130×9.7÷100 + 1050 × 2.7÷100 + 230×11.4÷100}{3525 + 800+ 2130+ 1050 + 230}\)

Answer 31

I got 0.04984550743 for portfolio 1. is that correct?

Answer 32

yes

Answer 33

I got B. Is that what you got?

Answer 34

it's probably correct if you did the calculations right, I didn't do the calculations

Answer 35

((4.3×751÷100−1,475×3.4÷100+1,155×9.7÷100+955×2.7÷100+1,005 ×11.4÷100)/
(751+1,475+1,155+955+1,005)) = 0.04391181426;
These were my calculations for Portfolio 2.

Answer 36

That looks right for 2

Answer 37

Thank you!

Answer 38

yw

Answer 39

Okay, I checked again and I got D.

Answer 40

okay

Answer 41

D was correct! Thank you for the help.

Answer 42

yw! :-)