Re: Help with Equation. Hi AIMStudent!
Thank you for taking a shot at this problem. I think you confused buying shares with selling shares. Your solution to the problem was selling shares, and I’m looking to buy shares to reduce extra cash. Let me clarify. When I have cash reserve at 59% cash to stock ratio, and want it to drop to 43.5%, I don’t want to sell shares. That would only increase extra cash and raise the cash to stock ratio %. I want to buy more shares to reduce extra cash.
When I’m talking about 59% cash reserve, I refer to cash to stock ratio. 59% in cash $1,179.80 and 41% in stock $819.81. If cash to stock ratio is 0% then for me it means I have $0 in cash and $1,999.61 in stock. (I hope this is how other people interpet this too.) If I want cash reserve to drop to 43.5%, I want cash to decrease from $1,179.80 to $885.50, and stock value to increase from $819.81 to $1,149.42. This would put cash to stock ratio right at 43.5%
As I input in my spreadsheet the numbers for buying new share amount at a specific price, the Cash to stock ratio changes automatically. Thus by trial and error, I concluded that I would need to spend $294.30 to buy 22.5 shares at $13.08 to get to that cash to stock ratio of 43.5%. I just don’t have the equation to get these figures.
My spreadsheet calculates the new stock price and adjusts the portfolio value accordingly. So that’s why $1,149.42 - $819.81 doesn’t equal the spent amount of $294.30, but instead $329.61. The stock price increased from the previous line of $12.54 to current $13.08.
I hope this makes sense to you AIMStudent.
Vitali
