The values for random variables in a Monte Carlo simulation are
A)selected manually.
B)generated randomly from probability distributions.
C)taken from forecasting analysis.
D)derived secondarily using formulas.

Question

Quizplus · Accepted Answer

In a Monte Carlo simulation, random variables are generated randomly from probability distributions. This allows for the simulation to account for uncertainty and variability in the input data, which is essential for accurate forecasting and predictive modeling. Manually selecting values or using derived formulas would not capture this variability and could result in unrealistic or inaccurate outputs.

The Values for Random Variables in a Monte Carlo Simulation