--%>
Assignment Help - homework help

Where are Monte Carlo simulations used

Where are Monte Carlo simulations used?

E

Expert

Verified

Monte Carlo simulations are used within financial problems for solving two kinds of problems:

• Exploring the statistical properties of a portfolio of investments or cashflows to determine quantities like expected returns, risk, possible downsides, probabilities of making certain profits or losses, etc.

• Finding the value of derivatives by exploiting the theoretical relationship among option values and expected payoff in a risk-neutral random walk.

   Related Questions in Financial Management

  • Q : SEU (surplus economic unit) and DEU

    What can a financial institution frequently do for a surplus economic unit that it would encompass difficulty doing for itself if the SEU (surplus economic unit) were to deal directly with a DEU (deficit economic unit)?

    		•
  • Q : Determine standard deviation and

    You have one hat containing normally distributed random numbers, with a mean of zero and a standard deviation of σ which is unknown. You draw N numbers φi from this hat. What is the ‘probability’ of drawing all of the numbers &ph

    		•
  • Q : Fm Explain the factors that responsible

    Explain the factors that responsible for the recent surge in international portfolio investment (IPI)?

    		•
  • Q : Explain the second way of calibration

    Explain the second way of calibration if we can’t measure that parameter.

    		•
  • Q : What is actuarial approach in Central

    What is actuarial approach in Central Limit Theorem?

    		•
  • Q : EBIT Boeing Company is expecting to

    Boeing Company is expecting to have EBIT next year of $10 million, with a standard deviation of $5 million. Boeing has $40 million in bonds with coupon of 8%, selling at par, which are being retired at the rate of $3 million annually. Boeing also has 200,000 shares of preferred stock, which pays ann

    		•
  • Q : Help me Staind, Inc., has 7 percent

    Staind, Inc., has 7 percent coupon bonds on the market that have 13 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond price?

    		•
  • Q : 10.1 Unfocused Books is a discount

    Unfocused Books is a discount retail bookshop that has three departments: fiction, non-fiction and children’s books. Sales and cost of sales for each department are shown below. In addition, each department has its own fixed costs for staffing and takes a one-third share of rental and management cos

    		•
  • Q : Why is the money given time value Why

    Why is the money given time value?

    		•
  • Q : How one would invest in first stock or

    How was Markowitz show that one would invest in the first stock or may be sold the second stock?

    		•