Exercise

Portfolio Simulation - Part II

Now we will use the simulation function you built to evaluate 10-year returns.

Your stock-heavy portfolio has an initial investment of $10,000, an expected return of 7% and a volatility of 30%. You want to get a 95% confidence interval of what your investment will be worth in 10 years. We will simulate multiple samples of 10-year returns and calculate the confidence intervals on the distribution of returns.

By the end of this exercise, you will have run a complete portfolio simulation.

The function portfolio_return() from the previous exercise is already initialized in the environment.

Instructions

100 XP
  • Initialize sims to 1,000.
  • Enter the appropriate values for the portfolio_return() function parameters.
  • Calculate the 95% confidence interval lower (lower_ci) and upper limits (upper_ci).