A Monte Carlo simulation is a technique used to understand the impact of risk and uncertainty in prediction and forecasting models. In finance, it is extensively applied to price complex derivatives, manage financial risk, and facilitate decision-making processes.
Monte Carlo Simulation is a computational algorithm that relies on repeated random sampling to obtain numerical results. It's particularly useful for assessing the probability distributions of complex systems.
A financial modeling technique that considers the likely outcomes of different hypothetical circumstances. Uncertainty may be modeled by the use of random numbers, as in a *Monte Carlo simulation* or worst cases by the use of *stress testing*.
