In: Finance
For this problem, you are asked to survey the Finance literature and select a published research paper that provides a practical example on how Monte Carlo is applied for solving a real world problem.
1) List and describe all of the pertinent information so that others can access the article for their own independent reading if so desired.
2) Summarize the definition of the problem, the Monte Carlo methodology employed [including both the relevant mathematical properties and computer resources] and the insights or outcomes associated with use of the Monte Carlo method.
1) Financial literature Review:
The literature also expanded beyond the basis of these numerical methods, such as Giles(200) his work on improving efficiency by introducing a multilevel approach to MC method.
2) Monte Carlo simulation performs risk analysis bu building model as possible results by substituting range of values .MC involves thousands of racalculations before it is complete.
Monte Carle simulation produces distribution of possible distribution of possible outcomes,probability distribution much more realistic way distributing uncertainity in variable of a risk analysis.