Monte Carlo simulation

An analytical technique for solving a problem by performing a large number of trail runs, called simulations, and inferring a solution from the collective results of the trial runs. Method for calculating the probability distribution of possible outcomes.

Similar financial terms

Simulation
The use of a mathematical model to imitate a situation many times in order to estimate the likelihood of various possible outcomes.

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Convex

Bowed, as in the shape of a curve. Usually referring to the price/required yield relationship for option-free bonds.


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