Given the left page scenario, what is the minimum number of days until the expected value rebalances to $1,000,000?
The diagram on the right demonstrates pictorially how expected values are calculated per day iteration
Given the left page scenario, what is the minimum number of days until the expected value rebalances to $1,000,000?
The diagram on the right demonstrates pictorially how expected values are calculated per day iteration
Awesome problem. There is much to consider, here. Why don't you share with us some of what you have considered?
Thought Question: with a .5 + .25 * 2 + .25 * (1/2) = .5 + .5 + .125 = 1.125 daily expected portfolio growth, are we SURE to get anywhere?
"Unique Answers Don't Care How You Find Them." - Many may have said it, but I hear it most from me.
Hey! I believe I have solved it. I calculated the expected values at the first three consecutive days, and derived a sequence formula for the nth expected value. Then I set it equal to 1,000,000 and voila! I got around n≈117.29 which rounds up to 118 days.
Confirmation or flat-out rejection of my proposed solution would be appreciated
Well, okay, but why did we do that? It's a consistent, well-defined, recursive process.
[tex]1.125^{n} = 1,000,000 \implies n = 117.2962683[/tex]
Did we need to draw the tree?
Last edited by mmm4444bot; 02-10-2018 at 03:27 AM. Reason: LaTex fix
"Unique Answers Don't Care How You Find Them." - Many may have said it, but I hear it most from me.
Bookmarks