Investment question In our model, each time step will represent one year, and ea

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Investment question

In our model, each time step will represent one year, and each year, you will invest a certain amount of money into one of five options. These five options will vary in risk and reward; that is, they will all have their individual payouts. You are allowed to invest any combinations of money into the five options. For example, you may invest half of your money in option S and the other half in option B. However, you must invest all of your money each year and you cannot take out any money during the year. At the end of each year, you may rearrange your investments as you wish. Now, one important thing to keep in mind is that outcomes of different investments are not independent of one another. If one investment performs well, chances are many other investments also do as well. That is, most investments have a positive correlation with one another. To replicate this in our model, each year there will be 4 possible outcomes: stellar (15%), good (35%), average (45%), and catastrophic (5%). Then, once the overall outcome for each year, each investment will randomly determine its payout independently from the others. Our five investment choices and their corresponding payouts are: If you had to invest all of your money into one of the five investments, what is the best choice if you have $30,000 with 6 years remaining? (Don't trust your initial reaction; do the math).

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Investment question In our model, each time step will represent one year, and ea

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