Lesson 16: Stock Market Simulation
March 15, 2022
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.
- Assume bond market returns are normally distributed
Assignment:
- Complete Project 3