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

question 36

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).

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Definitions:

Positive Outcomes

The beneficial results or effects of actions, decisions, or events, often measured in terms of success, progress, or improvement.

Responses

Reactions or behaviors of an organism in response to a specific stimulus or situation.

Organisms

Living entities that can carry out life processes independently, including animals, plants, and microorganisms.

Humanism

An ethical and philosophical position that highlights the significance and capability of humans, both as individuals and as a group, favoring rational thought and empirical evidence above the adherence to established beliefs or irrational practices.