Mathematics

Lucia Anthony

26 June, 11:52

8. A well-balanced stock market portfolio will often experience an exponential growth. A

particular investor with a well-balanced stock market portfolio records the portfolio balance

every month, in thousands of dollars, from the date of investment. The roughly exponential

growth can be transformed to a linear model by plotting the natural log of the balances

versus time, in months, where t - 0 represents the date the money was invested. The linear

regression equation for the transformed data is

In (balance) - 5.550 + 0.052t.

Using this equation, what is the predicted balance of the portfolio after 2 years (24 months) ?

(A) $5,654

(B) $6,798

(C) $285,431

(D) $896,053

(E) $948,464