Understanding Monte Carlo simulation
monte carlo simulation, also known as probability simulation is a technique with the help of which the impact of risk and uncertainty in various financial, project management and other forecasting models. It is a rational method usually used when a model has uncertain parameters. It simply shows how inputs in system can impact outcome. It is a feasible method for modelling risk in a system. Wide variety of fields such as physical science, computational biology, statistics, artificial intelligence, and quantitative finance use this method broadly. It, however, provides a probabilistic estimate of the uncertainty in a model. During world war 2 Monte Carlo Simulation Technique was introduced.
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