Simulating Annual Real Bond Returns

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Simulating Annual Real Bond Returns

Post by Anon9001 »

I want to simulate Real Annual Bond Returns to be used in MCS I made in Excel. I assume the Annual Real Bond Returns are having a Log-Normal Distribution so what I do is I take the exponent of the NORM.INV function (The NORM.INV function is with Probability Equal to “RAND()” and Mean, Standard Deviation equivalent to my Preferences) to get the Log Normal Values that I want. To convert them to returns I just subtract 1 from them.

Am I correct in doing this or am I wrong? I read from Wiki that if a variable is normally distributed you just need to take the exponent of that variable to get log-normal values. I assume to convert the log-normal values to returns I just need to subtract 1 from them but I am not sure about this.

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