Which of the Following Best Defines Monte Carlo Simulation

question 4

Multiple Choice

Which of the following best defines Monte Carlo simulation?

• A) It is a tool for building statistical models that characterize relationships among a dependent variable and one or more independent variables.
• B) It is a collection of techniques that seeks to group or segment a collection of objects into subsets.
• C) It is the process of selecting values of decision variables that minimizes or maximizes some quantity of interest.
• D) It is the process of generating random values for uncertain inputs in a model and computing the output variables of interest.

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Definitions:

Cost-Benefit Considerations

The process of comparing the costs and benefits of a decision, project, or investment to assess its feasibility or profitability.

Internal Control

Procedures and processes implemented by a business to safeguard assets, ensure accurate and reliable financial reporting, and promote compliance with laws and regulations.

Sarbanes-Oxley

A U.S. law enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Public Confidence

is the trust and belief the general public holds in the stability and integrity of institutions, markets, and systems.