The Values for Random Variables in a Monte Carlo Simulation

question 35

Multiple Choice

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.

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Definitions:

Amortization Period

Refers to the total time taken to pay off a debt in regular installments until the loan amount and interest are paid in full.

Compounded Semi-annually

The method of determining interest by adding it to both the original amount of money deposited or borrowed and the interest that has already been added over two periods within a year.

Amortization

The process of paying off a debt over time through regular payments.

Compounded Semi-annually

A method of calculating interest where the interest is added to the principal amount twice a year, leading to interest being earned on interest.