Question

The expression 1.08s + 1.02b1.08s+1.02b predicts the end-of-year value of a financial portfolio where ss is the value of stocks and bb is the value of bonds in the portfolio at the beginning of the year.

What is the predicted end-of-year value of a portfolio that begins the year with \$200$200 in stocks and \$100$100 in bonds?

Answer 1

$22350 is the predicted value of portfolio.

Explanation:

The given expression is 1.08s + 1.02b1.08s + 1.02b which predicts the end of year value of a financial portfolio.Here s = value of stocks and b = value of bonds.

Now we have to calculate the value of a portfolio with s = $200 and b = $100

So we will put the values of s and b in the given expression to calculate the value portfolio.

1.08×200 +1.02×(100)×1.08×(200)+ 1.02×(100) = 216 + 22032 + 102

= $22350

The predicted end to end year value of portfolio is = $22350