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Pak, with a seed of 1, to develop a Monte Carlos final answer to two decimal places. e after the first year changed to 30% short-term, 55% intermediate-t final answer to two decimal places. ce after the first year investment strategies in parts a and b and choo ge, the investment strategy in part a is more risk ge, the investment strategy in part a is less risky ge, the investment strategy in part a is less risky ge, the investment strategy in part a is more risk

Pak, with a seed of 1, to develop a Monte Carlos final answer to two decimal places. e after the first year changed to 30% short-term, 55% intermediate-t final answer to two decimal places. ce after the first year investment strategies in parts a and b and choo ge, the investment strategy in part a is more risk ge, the investment strategy in part a is less risky ge, the investment strategy in part a is less risky ge, the investment strategy in part a is more risk

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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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 0.02% and standard deviation of 0.30% for the short-term investment fund, a mean of 0.05% and standard deviation of 0.03% for the intermediate-term fund, and a mean of 0.062% and standard deviation of 0.07% 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. a. Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 100 trials to estimate the mean ending balance after the first year. Note: Round the final answer to two decimal places. Mean ending balance after the first year b. 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. Mean ending balance after the first year c. Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices. O On average, the investment strategy in part a is more risky and yields a lower return. O On average, the investment strategy in part a is less risky and yields a higher return. O On average, the investment strategy in part a is less risky but yields a lower return. O On average, the investment strategy in part a is more risky but yields a higher return.
Transcribed Image Text: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 0.02% and standard deviation of 0.30% for the short-term investment fund, a mean of 0.05% and standard deviation of 0.03% for the intermediate-term fund, and a mean of 0.062% and standard deviation of 0.07% 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. a. Use Analysis ToolPak, with a seed of 1, to develop a Monte Carlo simulation with 100 trials to estimate the mean ending balance after the first year. Note: Round the final answer to two decimal places. Mean ending balance after the first year b. 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. Mean ending balance after the first year c. Compare the two investment strategies in parts a and b and choose the most appropriate answer from the following choices. O On average, the investment strategy in part a is more risky and yields a lower return. O On average, the investment strategy in part a is less risky and yields a higher return. O On average, the investment strategy in part a is less risky but yields a lower return. O On average, the investment strategy in part a is more risky but yields a higher return.
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