If a Simulation Begins with the First Random Number, the Second

question 40

Multiple Choice

If a simulation begins with the first random number, the second simulated value would be:
Random numbers: 0.6246, 0.2594, 0.4055
$$\begin{array} { | c | c | } \hline \text { Demand } & \text { Frequency } \\\hline 0 & 0.15 \\\hline 1 & 0.30 \\\hline 2 & 0.25 \\\hline 3 & 0.15 \\\hline 4 & 0.15 \\\hline\end{array}$$

• A) 0.
• B) 1.
• C) 2.
• D) 3.
• E) 4.

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Definitions:

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, typically expressed in years.

Coupon

The interest rate on a bond that the issuer promises to pay to the holder until maturity.

Zero-Coupon Bond

A bond that does not pay periodic interest and is sold at a discount from its face value, with the return being the difference between the purchase price and the bond's face value at maturity.

Duration

A measure of the sensitivity of the price of a bond or other debt instrument to a change in interest rates, often indicating the bond's price volatility.