## Assignment 2

BUSI 721: Data-Driven Finance I

Rice University

- You want to retire in 30 years with $4,000,000 in your retirement account. If your investments yield an annual return of 8% and you currently have no savings, how much should you save each year to reach your retirement goal?

- Suppose in #1 that your returns are normally distributed with a mean of 8% and a standard deviation of 15%. Suppose you save the amount you calculated in #1. Run a simulation to determine the probability that you will meet your retirement goal.
- Repeat #2 assuming the standard deviation is only 10%. What is the probability of meeting your retirement goal?
- Use the following code to calculate
**daily**SPY returns. Calculate the skewness and kurtosis of the returns using the formulas presented in class.

```
import yfinance as yf
1990-01-01")["Adj Close"]
price = yf.download("spy", start=" ret = price.pct_change()
```

- Use the following code to calculate
**annual**SPY returns. Calculate the skewness and kurtosis of the returns using the formulas presented in class.

```
import yfinance as yf
1990-01-01")["Adj Close"]
price = yf.download("spy", start="
price = price.resample("Y").last()1] ret = price.pct_change()[:-
```

- Download the CPI from FRED and calculate annual inflation rates as the percent change in the end-of-year CPI from one year to the next. Using the annual (nominal) returns from #5, calculate the real rate of return of SPY each year.