Suppose that your long-lost Aunt Sara has left you an unexpected inheritance of

Question

Suppose that your long-lost Aunt Sara has left you an unexpected inheritance of $15,125. You have decided to invest the money rather than spend it on frivolous purchases.Your financial advisor has recommended that you diversify by placing some of the money in stocks and some in bonds. Based upon current market conditions, she has recommended that the amount in bonds should equal three -eighths of the amount invested in stocks. How much should be invested in stocks? How much should be invested in bonds?

Explanation / Answer

inheritance of $15,125

she has recommended that the amount in bonds should equal three -eighths of the amount invested in stocks.

Let's assmue amount invested in stocks be $x

So, amount invested in bonds = $ 3x/8

Sum of $x + $ 3x/ 8 = 15125

So, x +3x/8 = 15125

11x/8 = 15125

x = 15125*8/11 = $11000

So, $ 11000 is invested in stocks and $ 4125 is invested in bonds

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