Part IV

Simulations

For problems where analytical solutions are hard to obtain, simulation can be an alternative. In the real world the situations we want to study usually include uncertainty caused by random fluctuations. Such situations can be simulated on a computer. The first thing we do is to build a simulation model. Then we generate random numbers and put these into the model, which calculates the results we want to study. By running the simulations many times we can study the desired results and their fluctuations.

Get Financial Modelling and Asset Valuation with Excel now with the O’Reilly learning platform.

O’Reilly members experience live online training, plus books, videos, and digital content from nearly 200 publishers.