Question Your new client, Maria (a resident of Trois-Rivires), wishes to invest $ 1,000,000 in an ETF that replicates the performance of the Wilshire 5000 index. In order to make an informed decision and obtain an estimate of her wealth future, she would like information on the following:

a) Assuming that the performance of this index for the period 1975-2019 is representative of the future and a normal distribution of returns, calculate:

i. The probability of incurring a loss greater than $ 150,000 in the next year. ii. The probability of obtaining a return of between --8% and 12% over the next year. iii. The Value at Risk (VaR) over a three-year period at a confidence level of 98%.

b) Has a Canadian investor, who has held on a continuous basis a representative portfolio of the Wilshire 5000 index for the period between 1975-2019, achieved a higher, equal or lower return than that of an investor American who placed their capital in the same index portfolio. Justify your answer.

c) Assuming that the historical performance of the Wilshire 5000 stock index for the period 1975 to 2019 is representative of the future, give an estimate of the value of Maria's portfolio in ten years?