Monte Carlo simulation is:
A)the method of analysis most widely used by executives.
B)a very simple formula.
C)more complex than sensitivity or scenario analysis.
D)the oldest capital budgeting technique.
E)most commonly applied to small,short-term projects.

Question

Quizplus · Accepted Answer

Monte Carlo simulation involves using random variables and probability distributions to model and analyze uncertainty in a project or investment. It is generally more complex than sensitivity or scenario analysis, which involve testing specific changes to variables or assumptions. Monte Carlo simulation can be applied to projects of any size or duration, but may be particularly useful for larger and more complex projects.

Monte Carlo Simulation Is