Question

Harvey invested $50,000 to create a portfolio containing 70% stocks and 30% bonds. Over the course of a year, the value of his stocks increased to 74% and the value of his bonds decreased to 26%. The value of his investment, after a year, is $57,900. What amount should Harvey move from stocks and reinvest in bonds to rebalance his portfolio?

Answer 1

2316

Step-by-step explanation:

Currently, harvey has .74*57900 = 42846 in stocks. we want him to have .7*57900= 40530 in stocks. To accomplish this, he needs to take out 42846-40530= 2316 and invest it in bonds.