Project description:
Assume the distribution of annual US stock returns follows a normal distribution with a mean of 9 (corresponding to a 9% increase per year) and a standard deviation of 16. Suppose you invest $7,500 in stocks with the goal of saving enough to buy a $10,000 car in 3 years. What is the probability you will have enough money at the end of 3 years to buy the car? If you type (or copy) “=NORM.INV(RAND(), 9, 16)” in a cell in Excel the result will be a random draw from a normal distribution with mean 9 and standard deviation 16.