Exam 3 Instructions
April 10, 2017
Exam 3 Instructions:
- Due Date: On or before Tue April 25
- 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 the demo.
- Demo: You must demonstrate your Python program or Sheets/Excel worksheet to me in person. 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. Demo with 1-page printout due on or before Apr 25. Demo as soon as you’re ready. Earlier is better. I will leave time for demos (on your laptop or on my PC in my office) at the end of class next week. You may also demo during regular office hours, MW 12:30-2:30.
- Grading: I will present Exam 3 results and your grade summary (for Exam 3 and the term) in class on Thu, Apr 27