Lesson 20: Stock Market Simulation in Python

Review:

• Dice game simulation

Presentation:

• Generate normal distribution in Python
• Stock Market Simulation

Activity:

• Implement features from final Sheets Simulation

Lesson 19: Dice Game Simulation in Python

Review:

• Project 3 grading
• Variables
• Lists
• If Statements

Presentation:

• Loops
• Dice Simulation Example

Activity:

• Create your own Dice Simulation on Repl.it
• Simulate “Pass”, a simplified version of Craps
• Rules of Pass
  • Player rolls a pair of six-sided dice and…
    • wins if the roll is 7 or 11
    • loses if the roll is 2, 3 or 12
    • ties if the roll is 4, 5, 6, 8, 9 or 10
• Simulate 1000 games
• Calculate % wins, % losses and % ties

Lesson 18: Python Variables, Lists and If Statements

Review:

• Python with replit.com
• Hello World
• Ukraine Panel tonight

Presentation:

• Variables
• Calculations
• Lists
• If Statements
• Use a Coin Flip Simulation program to demonstrate
• Compare to Coin Toss Simulation in Sheets

Activity:

• Use the randint() function
• Replicate CoinFlipSim-01
• Replicate CoinFlipSim-02
• Replicate CoinFlipSim-03
• In each of the three programs, replace random() with randint()
• Then make necessary changes to get the program to run properly

Lesson 17: Intro to Python

Review:

• Stock Market Simulation Project

Presentation:

• Data Science
  • Combination of statistics + programming with big data
  • Hot like computer software development in the 1990’s
  • Salaries are high 

• Python
  • Programmers and companies are moving to Python
  • Google uses Python extensively
  • Python is gaining market share rapidly

Activity:

• Create an account on replit.com
• Write a “Hello World” program
• Here’s an example

Lesson 16: Stock Market Simulation

Review:

• Coin Flip and Dice simulation (discrete)
• Stock Market Simulation (continuous)
• Project 3

Presentation:

• March Madness Challenge
  • BracketOdds
  • Basic Simulation
  • Bracket
  • Extra Credit Opportunity (up to 40 points)
    • Read BracketOdds materials
    • Write a 2-4 page paper explaining the approach/methodology and how it can improve bracket selection
    • Create a bracket and email with paper
    • Due Thu, Mar 17 at 10:30am

• Back to the Stock Market Simulation
• Demonstrate adding/combining Stock Market and Bond Market returns

Activity:

• Add a “fixed income” (bonds) component to your stock market simulation
  • Assume bond market returns are normally distributed
    • mean = 7.88%
    • standard deviation = 6.86%
  • Your “portfolio” allocation should be 60% stocks and 40% bonds
  • Stock market and bond market returns should be combined each year and then reallocated in the following year.

Assignment:

• Complete Project 3

Project 3: Retirement Portfolio Simulation

Due Fri, Mar 18 at 5pm

Instructions:

• Build a Stock + Bond Market Simulation

• Simulation Requirements
  • 40-year time horizon
  • Simulation count, n=100
  • Ability to set/modify simulation parameters by changing cell values (not by editing formula)
    • initial balance
    • annual contribution
    • stock/bond % allocation
    • financial target, e.g., $1,000,000
  • Functional start button to launch automation of simulation
  • Display at end of simulation
    • probability (%) of reaching financial target
    • distribution of end balances on a histogram
    • calculation of Max, Min, Mean, Median and Standard Deviation of end balances

• Run 4 simulation scenarios
  • Scenario 1
    • Beginning balance = 10,000
    • Annual contribution = 1,000
    • Stock/Bond allocation = 60%/40%
    • Target = $1,000,000
  • Scenario 2
    • Beginning balance = 10,000
    • Annual contribution = 1,000
    • Stock/Bond allocation = 80%/20%
    • Target = $1,000,000
  • Scenario 3
    • Beginning balance = 3,000
    • Annual contribution = 3,000
    • Stock/Bond allocation = 60%/40%
    • Target = $2,000,000
  • Scenario 4
    • Beginning balance = 3,000
    • Annual contribution = 3,000
    • Stock/Bond allocation = 80%/20%
    • Target = $2,000,000
  • For each scenario, answer the following questions:
    • What is the Max, Min, Mean, Median and Standard Deviation of end balances
    • What is the probability of reaching the target?

• Prepare a Spreadsheet file
  • You’ll use a Google Sheets file to document and explain your simulation
  • Make it easy to understand and navigate
• Create a Video
  • You will provide a brief tour of your spreadsheet and explain your simulation and the 4 scenario runs.
  • Your video should be approximately 3-4 minutes in length. It’s okay if it’s a little longer or a little shorter.
  • It doesn’t need to be fancy. Just you speaking clearly and explaining your simulation + results.
  • You can use Zoom or some other screen recording setup OR you can simply use your phone’s video recorder.
  • Recently, some students in other classes have used PowerPoint’s video recording with very good results.
  • You need to appear on camera, at least for a few seconds.
• Submit links to your Spreadsheet and your Video
  • Upload your video to YouTube or Google Drive or some other hosting location and save the link.
  • Share your Google Sheets spreadsheet and save the link.
  • Submit both the video link and the Google Sheets link via Google Forms

Lesson 15: Simulation of Continuous Random Variables

Review:

• Project 2
• Simulation automation
• Chuck-a-luck

Presentation:

• Random Variables
  • Discrete Random Variables
    • Probability distribution table
    • Dice Simulation
    • =RANDBETWEEN()
  • Continuous Random Variables
    • Stock Market simulation
    • Assume normal distribution
    • =norminv(rand(),$B$2,$B$3)

Assignment:

• Stock Market Simulation in Sheets
  • Use Annual Stock Market Return data as a starting point
• Modifications
  • Generate a 40-year simulation (you’ll need to modify the automation script)
  • Modify the simulation to add $1,000 to the balance at the end of each year
  • Make a histogram of your ending balances
  • Press run to make your histogram “dance” as it generates new ending balances