Monte Carlo simulation is:
A) the method of analysis most widely used by executives.
B) a very simple formula.
C) more complex than sensitivity or scenario analysis.
D) the oldest capital budgeting technique.
E) None of these.

Question

Quizplus · Accepted Answer

Monte Carlo simulation involves running multiple simulations to account for uncertainties and variability within a model. This process is more complex than sensitivity or scenario analysis, which involve changing one variable at a time. It is not necessarily the most widely used method by executives nor is it a simple formula. It is also not the oldest capital budgeting technique.

Monte Carlo Simulation Is