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 2.00% and standard deviation of 0.30% for the short-term investment fund, a mean of 5.00% and standard deviation of 2.50% for the intermediate-term fund, and a mean of 6.25% and standard deviation of 5.50% 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 or R, both with a seed of 1, to simulate 100 trials to estimate the mean ending balance after the first year and assess the risk of this investment.

b. If the alocation is changed to 30% short-term, 55% intermediate-term, and 15% long-term, estimate the ending balance after the first year and the risk of the investment.

Answer rating: 100% (QA)

Given HA 002 oA 0003 PB 005 oB 0025 Hc 006250c 0055 a use analysis ToolPak or R both ... View the full answer