Monte Carlo simulation analysis

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Monte Carlo simulation analysis is a risk analysis technique in which a computer is used to simulate probable future events and thus to estimate the likely profitability and risk of a project.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Monte Carlo simulation analysis. A risk analysis technique in which a computer is used to simulate probable future events and thus to estimate the likely profitability and risk of a project.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Monte Carlo Simulation. A risk analysis technique in which probable future events are simulated on a computer, generating estimated rates of return and risk indexes.

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