All of the Following Statements Correctly Describe an Advantage or Disadvantage

question 5

Multiple Choice

All of the following statements correctly describe an advantage or disadvantage associated with the use of Monte Carlo Analysis EXCEPT: 

• A) The flexibility of Monte Carlo Analysis allows for more realistic estimates. 
• B) Monte Carlo simulation aids in the identification of near-critical paths. 
• C) Monte Carlo simulations typically require the use of special software and skills. 
• D) Monte Carlo simulations do not consider risks

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Definitions:

Compounding Interval

The frequency at which interest is applied to the principal sum of a loan or deposit, affecting the total interest earned or paid.

Compounded Nominal Rate

The rate of interest quoted for a period, usually a year, without taking into account the effect of compounding within that period.

Effective Rate

The actual interest rate of an investment or loan, taking into account the effect of compounding interest as opposed to the nominal or stated rate.

Annuity

A monetary product designed to deliver regular payouts, mainly aimed at funding retirees' income needs.