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6. An investor is considering investing in a certain stock portfolio. Any investment cannot be removed for 1 year. The investor believes that there is
6. An investor is considering investing in a certain stock portfolio. Any investment cannot be removed for 1 year. The investor believes that there is a chance the portfolio could return a range of growths from 10% to +10%, but with an expected growth of 3%. Assuming the investor has a probability distribution for any growth value, describe how a stochastic and a deterministic model could be used to calculate the expected value of the portfolio after 1 year. Explain, in terms of this situation, some of the benets and limitations of using each model. [Total: 4 marks]
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