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Microsoft® Excel Data Analysis and Business Modeling by Wayne L. Winston

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Chapter 60. Simulating Stock Prices and Asset Allocation Modeling

  • I recently bought 100 shares of GE. What is the probability that during the next year this investment will return more than 10 percent?

  • I’m trying to determine how to allocate my investment portfolio between stocks, Treasury bills, and bonds. What asset allocation over a 5-year planning horizon will yield an expected return of at least 10 percent and minimize risk?

The last few years have shown us that future returns on our investments are highly uncertain. In this chapter, I’ll explain a relatively simple approach that can be used to assess uncertainty in future investment returns. This approach is based on the idea of bootstrapping. Essentially, bootstrapping simulates future investment ...

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