April 17, 2016
[highlight color=”options: yellow, black”]Exam 3 on Mon, Apr 25[/highlight]
Part 1 Take Home Instructions:
- Software: Python or Sheets/Excel
- Data: S&P 500 Historical Returns
- Simulation: Stock Market Investment Returns
- Randomly sample the S&P 500 Historical Returns to simulate stock market returns. Assume the historical return data are normally distributed.
- Use a 40-year investment time horizon.
- Start with a $10,000 balance.
- Run a Monte Carlo simulation to generate 500 ending investment balances.
- Find the mean and standard deviation of your ending balances.
- Generate a histogram displaying the distribution of your ending balances.
- Print 1 Page with your (1) name, (2) section, (3) mean and standard deviation of ending balances, and (4) the histogram displaying the distribution of your ending balances. Bring your 1-page print out to your demo.
- Demo: [highlight color=”options: yellow, black”]You must demonstrate your Python program or Sheets/Excel worksheet to me in person[/highlight]. Be prepared to explain your simulation, answer questions and make (or allow me to make) modifications to your program or worksheet to test alternative parameters (e.g., different investment time horizon, different starting balance, different number of simulations, etc).
- Due Date: Yesterday. Just kidding. But in business clients always want everything yesterday and prefer to pay tomorrow. So get used to it. [highlight color=”options: yellow, black”]Demo with 1-page printout due on or before class on Apr 27[/highlight]. Demo as soon as you’re ready. This week is better than next week. I will have additional office hours TTh 2:30-4:30pm this week and next. Regular office hours are MW 12:30-2:30, 4:00-4:30pm.
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