Question

There are four main steps in building a Monte Carlo simulation: select probability distribution(s); run the simulation model through a large number of trials; analyze results of multiple trials to assess risks and opportunities; and generate ______ variables.

Answer 1

random

Explanation:

Monte Carlo simulation is a technique which is used to analyze the impact of risk and uncertainty in financial projects and forecasting models. It helps to understand the potential outcomes to better understand the decision based on risk level. It analyzes the probability of different outcomes by intervention of random variables.