First, thank you for a great piece of software! I have always returned to FRP after experimenting with other planning software. However, I have not been able to find the answer to this question.
Does the FRP sprinkle negative rates of returns into the simulations? All the numbers have have seen in the results data suggest that negative rates are not used.
Sorry if this has been discussed before as I could not find a thread that touched on the subject.
Thanks!
Negative Rates of Returns
Re: Negative Rates of Returns
FRP doesn't do anything specific to intentionally "sprinkle in" negative returns, however depending on the return and standard deviation you set up, it's usually very likely that many negative returns will get pulled during each simulation run.
For example, if you set the average return to 8% and the standard deviation to 8%, I think it works out that around 16% of the randomly selected returns will be negative.
https://en.wikipedia.org/wiki/Standard_deviation
For example, if you set the average return to 8% and the standard deviation to 8%, I think it works out that around 16% of the randomly selected returns will be negative.
https://en.wikipedia.org/wiki/Standard_deviation
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