Q: Run the retirement model with a damping factor of 1.0
Run the retirement model with a damping factor of 1.0 (instead of 0.98), again using the same three sets of investment weights. Explain in words what it means, in terms of the simulation, to have a da...
See AnswerQ: The simulation output indicates that an investment heavy in stocks produces the
The simulation output indicates that an investment heavy in stocks produces the best results. Would it be better to invest entirely in stocks? Answer this by rerunning the simulation. Is there any app...
See AnswerQ: Modify the model so that you use only the years 1975 to
Modify the model so that you use only the years 1975 to 2007 of historical data. Run the simulation for the same three sets of investment weights. Comment on whether your results differ in any importa...
See AnswerQ: Referring to the retirement example, rerun the model for a planning
Referring to the retirement example, rerun the model for a planning horizon of 10 years; 15 years; 25 years. For each, which set of investment weights maximizes the VAR 5% (the 5th percentile) of fina...
See AnswerQ: A European put option allows an investor to sell a share of
A European put option allows an investor to sell a share of stock at the exercise price on the exercise data. For example, if the exercise price is $48, and the stock price is $45 on the exercise date...
See AnswerQ: Modify the Pigskin spreadsheet model in the following way. Assume that
Modify the Pigskin spreadsheet model in the following way. Assume that the timing of demand and production are such that only 70% of the production in a given month can be used to satisfy the demand i...
See AnswerQ: Modify that the portfolio now contains 100 shares of stock and one
Modify that the portfolio now contains 100 shares of stock and one put option on the stock with the same parameters as in the example. You can assume that the price of an option is $81. Discuss in a b...
See AnswerQ: Change the new car simulation as follows. It is the same
Change the new car simulation as follows. It is the same as before for years 1 through 5, including depreciation through year 5. However, the car might sell through year 10. Each year after year 5, th...
See AnswerQ: The possible profits vary from negative to positive for each of the
The possible profits vary from negative to positive for each of the 10 possible bids examined. a. For each of these, use @RISK’s RISKTARGET function to find the probability that Miller’s profit is pos...
See AnswerQ: Based on Kelly (1956). You currently have $100.
Based on Kelly (1956). You currently have $100. Each week you can invest any amount of money you currently have in a risky investment. With probability 0.4, the amount you invest is tripled (e.g., if...
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