Simulate Amanda's Portfolio Over the Next 30 Years and Determine

question 58

Essay

Simulate Amanda's portfolio over the next 30 years and determine how much she can expect to have in her account at the end of that period.At the beginning of each year,compute the beginning balance in Amanda's account.Note that this balance is either 0 (for year 1)or equal to the ending balance of the previous year.The contribution of $5,000 is then added to calculate the new balance.The market return for each year is given by a normal random variable with the parameters above (assume the market returns in each year are independent of the other years).The ending balance for each year is then equal to the beginning balance,augmented by the contribution,and multiplied by (1+Market return).Suppose Amanda will stop investing in the stock market and transfer all of her retirement into a savings account if and when she reaches $500,000.When can she expect to reach this goal?

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Definitions:

Investor's Return

The amount of profit or loss an investor realizes on an investment, reflecting the overall performance and earnings from the investment.

Dividend Value

The portion of a company's earnings distributed to shareholders, typically in the form of cash payments.

Stock Price

The cost of purchasing a share of a particular company, which fluctuates based on market conditions, company performance, and investor sentiment.

Dividend Growth Rate

The annualized percentage rate of growth of a company's dividend payments, indicating the company's dividend payment trend over time.