Monte Carlo Simulation

question 185

Multiple Choice

Monte Carlo simulation

• A) Can be useful for estimating a project's stand-alone risk.
• B) Is capable of using probability distributions for variables as input data instead of a single numerical estimate for each variable.
• C) Produces both an expected NPV (or IRR)and a measure of the riskiness of the NPV or IRR.
• D) All of the above.
• E) Only answers a and b are correct.

---

Definitions:

Total Costs

The entire sum of all expenses incurred by a business in producing goods or services, including both fixed and variable costs.

Price Of Oil

The cost per barrel at which crude oil is bought and sold in the global market.

Extract More

The process of increasing the quantity taken from resources or datasets, often aiming for higher yields or more information.

Conflict Diamonds

Diamonds mined in a war zone and sold to finance an insurgency, an invading army's war efforts, or a warlord's activity.