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Questions 1. The file Investing for College.xls...

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Questions 1. The file Investing for College.xlsx contains 261 monthly returns of the S&P 500 and Treasury bills from January 1970 through September 1991. (If you can find more recent data on the Web, feel free to use it.) Suppose that in each of the next 72 months (6 years), it is equally likely that any of the historical returns will occur. Develop a spreadsheet model to simulate the two suggested investment strategies over the 6-year period. Plot the value of each strategy over time for a single iteration of the simulation. What is the total value of each strategy after 6 years? Do either of the strategies reach the target? 2. Simulate 1000 iterations of the two strategies over the 6-year period. Create a histogram of the final fund values. Based on your simulation results, which of the two strategies would you recommend? Why? 3. What other real-world factors might be important to consider in designing the simulation and making a recommendation?

 

Paper#12730 | Written in 18-Jul-2015

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