Continued... Question Four (Total: 25 marks) You ran a simple simulation on the annual returns of your portfolio of telco stocks. Telco stocks' return depends greatly on Malaysia's economic environment. Table 1 shows the probability of TM's stock annual retum. Tahle 1: Cumulative Prohahility of Annual Return Cumulative High growth Cummibtive Moderate growth Cummulative Low growth Return Prosbability Rate of Return Retum Proabability Rate of Return Returti Prosbability Rate of Return 0.001 10% 0.0000 0.00 2% 0.101 12% 0.15001 5% 0.35 3% 0.201 15% 0.3000 11% 0.65 3% 0.25 18% 0.6000 13% 0.85 5% 0.351 21% 0.8500 15% 0.90 0.45 23% 0.9000l 0.95 8% Due to the outbreak of the covid-19 pandemic in 2020, the probability of telco stocks' annual return for the next 5 years is expected to be high. However, the annual return for the following years will be based on the probability of 30% high growth, 50% moderate growth and 20% low growth. Your initial cash invested the portfolio of telco stocks is RM20,000. Based on all the information provided, answer the following questions. (a) Construct a 20-year simulation model to show the average annual return and the final ending cash of your portfolio. (15 marks) (b) Explain how you would verify and validate your simulation model in (a). (10 marks) Continued... Question Four (Total: 25 marks) You ran a simple simulation on the annual returns of your portfolio of telco stocks. Telco stocks' return depends greatly on Malaysia's economic environment. Table 1 shows the probability of TM's stock annual retum. Tahle 1: Cumulative Prohahility of Annual Return Cumulative High growth Cummibtive Moderate growth Cummulative Low growth Return Prosbability Rate of Return Retum Proabability Rate of Return Returti Prosbability Rate of Return 0.001 10% 0.0000 0.00 2% 0.101 12% 0.15001 5% 0.35 3% 0.201 15% 0.3000 11% 0.65 3% 0.25 18% 0.6000 13% 0.85 5% 0.351 21% 0.8500 15% 0.90 0.45 23% 0.9000l 0.95 8% Due to the outbreak of the covid-19 pandemic in 2020, the probability of telco stocks' annual return for the next 5 years is expected to be high. However, the annual return for the following years will be based on the probability of 30% high growth, 50% moderate growth and 20% low growth. Your initial cash invested the portfolio of telco stocks is RM20,000. Based on all the information provided, answer the following questions. (a) Construct a 20-year simulation model to show the average annual return and the final ending cash of your portfolio. (15 marks) (b) Explain how you would verify and validate your simulation model in (a). (10 marks)