Lesson 9: Continuous Random Variables

February 10, 2020

Review:

• Quiz 04.
• Probability Models
• Dice Simulation

Presentation:

• Continuous Random Variables
  • Area under a density curve (e.g., Normal Curve)
  • Stock Market Simulation
    • How to simulate a normal distribution in Sheets
    • Using Annual Stock Market Return data

Activity:

• Create a Stock Market Simulation in Sheets using the Annual Stock Market Return data
  • Generate a 40-year simulation.
  • Use $10,000 as your starting balance
  • Modify the simulation to add $1,000 to the balance each year
  • Run a few test simulations to be sure the numbers make sense
  • When ready, run the simulation n=30 times and save the ending balance from each simulation.
  • Make a histogram of your ending balances