One of the main uses of ratios is to divide a quantity.

For instance, an investment fund might say that all the money invested in it will be subsequently invested in a ratio of 5:3:2 between European equities, US equities and US bonds.

If we were then invested $2000 and wanted to know how much would go to each type of equity, we would do it as follows.

European equities would get 5 out of (5+3+2) parts, so 5/10, so 1/2, so $1,000

US equities would get 3 out of (5+3+2) parts, so 3/10, so 3/10 x 2000 = 6000/10 = $600

US bonds would get 2 out of (5+3+2) parts, so 2/10, so 1/5, so $400.

Always check at the end that the individual amounts assigned add up to the total amount.

An alternative way to tackle this problem would be to find the value of one part then “multiply up”. So because there are 5+3+2 = 10 parts altogether, each part is worth $2000 ÷ 10 = $200. So the three parts are worth 5 x $200, 3 x $200 and 2 x $200, i.e. $1,000, $600 and $400, as we found above.

Example

Exercise

Let’s complete exercise 13B on pages 211 and 212 of the textbook:

The answers are below: