Understanding What Happens
If your simulation is like most others, Pink finishes with the highest amount. Red is exciting but has a bad habit of crashing. Green does okay, usually in second place behind Pink, but it’s not as interesting as Pink or Red. White is boring. To see how we could have anticipated these results, we will define random variables associated with these investments. Two properties of these random variables, namely, means and variances, explain what happens in the simulation.
Random Variables
Table 2 defines three random variables, one for each investment simulated by the dice. Each random variable defines a correspondence between the possible outcomes of a random experiment (rolling the dice) and returns. Assuming you’ve got ...
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