An investor wants to invest $300,000 in a portfolio of three mutual funds. The annual fund returns are normally distributed with a mean of 2% and standard deviation of 0.3% for the short-term investment fund, a mean of 5% and standard deviation of 3% for the intermediate-term fund, and a mean of 6.2% and standard deviation of 5% for the long-term fund. An initial plan for the investment allocation is 45% in the short-term fund, 35% in the intermediate-term fund, and 20% in the long-term fund. Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 1000 trials to estimate the mean ending balance after the first year. Note: Round the final answer to two decimal places. If the allocation is changed to 30% short-term, 55% intermediate-term, and 15% long-term, estimate the ending balance after the first year. Note: Round the final answer to two decimal places. Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices. multiple choice On average, the investment strategy in part a is more risky and yields a lower return. On average, the investment strategy in part a is less risky and yields a higher return. On average, the investment strategy in part a is less risky but yields a lower return. On average, the investment strategy in part a is more risky but yields a higher return.
An investor wants to invest $300,000 in a portfolio of three mutual funds. The annual fund returns are normally distributed with a mean of 2% and standard deviation of 0.3% for the short-term investment fund, a mean of 5% and standard deviation of 3% for the intermediate-term fund, and a mean of 6.2% and standard deviation of 5% for the long-term fund. An initial plan for the investment allocation is 45% in the short-term fund, 35% in the intermediate-term fund, and 20% in the long-term fund. Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 1000 trials to estimate the mean ending balance after the first year. Note: Round the final answer to two decimal places. If the allocation is changed to 30% short-term, 55% intermediate-term, and 15% long-term, estimate the ending balance after the first year. Note: Round the final answer to two decimal places. Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices. multiple choice On average, the investment strategy in part a is more risky and yields a lower return. On average, the investment strategy in part a is less risky and yields a higher return. On average, the investment strategy in part a is less risky but yields a lower return. On average, the investment strategy in part a is more risky but yields a higher return.
An investor wants to invest $300,000 in a portfolio of three mutual funds. The annual fund returns are normally distributed with a mean of 2% and standard deviation of 0.3% for the short-term investment fund, a mean of 5% and standard deviation of 3% for the intermediate-term fund, and a mean of 6.2% and standard deviation of 5% for the long-term fund. An initial plan for the investment allocation is 45% in the short-term fund, 35% in the intermediate-term fund, and 20% in the long-term fund. Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 1000 trials to estimate the mean ending balance after the first year. Note: Round the final answer to two decimal places. If the allocation is changed to 30% short-term, 55% intermediate-term, and 15% long-term, estimate the ending balance after the first year. Note: Round the final answer to two decimal places. Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices. multiple choice On average, the investment strategy in part a is more risky and yields a lower return. On average, the investment strategy in part a is less risky and yields a higher return. On average, the investment strategy in part a is less risky but yields a lower return. On average, the investment strategy in part a is more risky but yields a higher return.
An investor wants to invest $300,000 in a portfolio of three mutual funds. The annual fund returns are normally distributed with a mean of 2% and standard deviation of 0.3% for the short-term investment fund, a mean of 5% and standard deviation of 3% for the intermediate-term fund, and a mean of 6.2% and standard deviation of 5% for the long-term fund. An initial plan for the investment allocation is 45% in the short-term fund, 35% in the intermediate-term fund, and 20% in the long-term fund.
Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 1000 trials to estimate the mean ending balance after the first year.
Note: Round the final answer to two decimal places.
If the allocation is changed to 30% short-term, 55% intermediate-term, and 15% long-term, estimate the ending balance after the first year.
Note: Round the final answer to two decimal places.
Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices.
multiple choice
On average, the investment strategy in part a is more risky and yields a lower return.
On average, the investment strategy in part a is less risky and yields a higher return.
On average, the investment strategy in part a is less risky but yields a lower return.
On average, the investment strategy in part a is more risky but yields a higher return.
Definition Definition Measure of central tendency that is the average of a given data set. The mean value is evaluated as the quotient of the sum of all observations by the sample size. The mean, in contrast to a median, is affected by extreme values. Very large or very small values can distract the mean from the center of the data. Arithmetic mean: The most common type of mean is the arithmetic mean. It is evaluated using the formula: μ = 1 N ∑ i = 1 N x i Other types of means are the geometric mean, logarithmic mean, and harmonic mean. Geometric mean: The nth root of the product of n observations from a data set is defined as the geometric mean of the set: G = x 1 x 2 ... x n n Logarithmic mean: The difference of the natural logarithms of the two numbers, divided by the difference between the numbers is the logarithmic mean of the two numbers. The logarithmic mean is used particularly in heat transfer and mass transfer. ln x 2 − ln x 1 x 2 − x 1 Harmonic mean: The inverse of the arithmetic mean of the inverses of all the numbers in a data set is the harmonic mean of the data. 1 1 x 1 + 1 x 2 + ...
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