Weighted average return on assets
Imagine you have some money, and you decide to use it to buy different things so that you can make even more money. Some of the things you buy might make you a lot of money, while others might not make you as much. The weighted average return on assets is a way to figure out how much money you make on average from all the things you buy.
To find out your weighted average return on assets, you need to know two things: the amount of money you invested in each thing (these are your assets), and how much money each asset made for you. Then, you multiply the percentage return by the amount invested for each asset, and add up all those results. Finally, you divide the total by the sum of all the amounts invested, and that gives you your weighted average return on assets.
For example, let's say you have $100 and you decide to use it to buy two different assets: a stock and a bond. You invest $50 in the stock and $50 in the bond. Over the course of the year, the stock makes a 10% return (or $5), while the bond makes a 5% return (or $2.50). To find your weighted average return on assets, you would multiply the percentage return by the amount invested for each asset, like so:
- Stock: 10% x $50 = $5
- Bond: 5% x $50 = $2.50
Then, you add up those results to get a total return of $7.50. Finally, you divide the total by the amount invested to get your weighted average return on assets:
- Weighted average return on assets: $7.50 ÷ $100 = 7.5%
So in this case, your weighted average return on assets is 7.5%, which means that on average, you made 7.5% per year on your investments.
To find out your weighted average return on assets, you need to know two things: the amount of money you invested in each thing (these are your assets), and how much money each asset made for you. Then, you multiply the percentage return by the amount invested for each asset, and add up all those results. Finally, you divide the total by the sum of all the amounts invested, and that gives you your weighted average return on assets.
For example, let's say you have $100 and you decide to use it to buy two different assets: a stock and a bond. You invest $50 in the stock and $50 in the bond. Over the course of the year, the stock makes a 10% return (or $5), while the bond makes a 5% return (or $2.50). To find your weighted average return on assets, you would multiply the percentage return by the amount invested for each asset, like so:
- Stock: 10% x $50 = $5
- Bond: 5% x $50 = $2.50
Then, you add up those results to get a total return of $7.50. Finally, you divide the total by the amount invested to get your weighted average return on assets:
- Weighted average return on assets: $7.50 ÷ $100 = 7.5%
So in this case, your weighted average return on assets is 7.5%, which means that on average, you made 7.5% per year on your investments.