Monte Carlo Simulation

question 25

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 answers above.
• E) Only answers a and b are correct.

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Definitions:

Economic Income

The total value of all income earned, including both monetary and non-monetary gains, over a period of time.

Transfer Payment

Payments made by the government to individuals or other organizations without expecting a good or service in return.

African-American Persons

Individuals of African descent living in the United States, often with a history linked to enslavement and civil rights struggles.

Hispanic Persons

Individuals who identify with, or originate from, Spanish-speaking countries, particularly those in Latin America.