Explain How Monte Carlo Simulation Uses Random Numbers

question 23

Essay

Explain how Monte Carlo simulation uses random numbers.

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Definitions:

Retained Earnings

Profits that a company has kept or retained rather than distributing to shareholders as dividends.

Net Income

The net income of a business once all costs, taxes, and expenses are deducted from its total revenue.

Dividend

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.

Treasury Stock

Shares that were once part of the outstanding shares of a company but were later reacquired and are held in the company’s treasury.