Use the Table Below to Answer the Following Question(s)

question 12

Multiple Choice

Use the table below to answer the following question(s) .
Below is the spreadsheet for a portfolio allocation model.

Assume that the distributions of life insurance annual return is uniform distribution with minimum 4% and maximum 6%, bond mutual funds annual return is normal with mean 7% and standard deviation 1%, stock mutual funds annual return is lognormal with mean 11% and standard deviation 4%.
-What is the value of standard deviation obtained from the simulation results for maximizing the total expected return? [Hint: Choose the approximate value.]

• A)$ 1,346.78
• B)$ 1,890.25
• C)$833.19
• D)$ 1,578.64

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Definitions:

Economic Question

Fundamental questions that address the allocation of resources and the distribution of goods and services in an economy.

Pure Capitalism

An economic system purely driven by market forces with minimal governmental intervention, where private individuals and firms control the production and distribution of goods.

Central Planning

An economic system where key decisions about production, distribution, and consumption of goods and services are made by the government or a central authority.

Shift Inward

A situation in economics where the supply curve moves towards the origin, indicating a decrease in supply at every price level.