What Is the First Step in a Monte Carlo Analysis

question 54

Multiple Choice

What is the first step in a Monte Carlo analysis?

• A)Determine the probability distribution of each variable. 
• B)For each variable, such as the time estimate for a task, select a random value based on the probability distribution for the occurrence of the variable. 
• C)Assess the range for the variables being considered. 
• D)Run a deterministic analysis or one pass through the model using the combination of values selected for each one of the variables.

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Definitions:

Charge And Discharge Statement

A financial report detailing the charges or debits against an account and the credits or payments made to it, often used in the context of trust accounts or estates to show activities over a period.

Journal Entry

A record that keeps the details of a financial transaction in the accounting books, involving a debit and credit.

Funeral Cost

Funeral Cost pertains to all expenses incurred for the burial or cremation and the associated ceremonies and services following a death.

Federal Estate Tax

A tax imposed by the federal government on the transfer of the taxable estate of a deceased person, whether it passes via will, according to state law, or in other ways.