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You are deciding how to invest your holdings of your 401(k) retirement plan. Each of the 50 stocks you can invest in have a mean

You are deciding how to invest your holdings of your 401(k) retirement plan. Each of the 50 stocks you can invest in have a mean return of 10% per year with a standard deviation of 6% of the investment. You have $1000 to invest. We will assume that the returns across stocks are independent. (a) Suppose you invest all of the money in a single stock. Assuming that returns are normally distributed, what is the chance that you loose money in the first year? (b) Instead of investing in a single stock, your financial planner suggests putting an equal amount into all 50 stocks. What is the chance that you loose money in the first year with this strategy? (c) In your answer for (b), do you need to assume that the returns are normally distributed? Why or why not?

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