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Author Question: The choice of the probability distribution for a random variable can be guided by a. an objective ... (Read 63 times)

cool

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on: Jun 24, 2018
The choice of the probability distribution for a random variable can be guided by
 a. an objective function.
  b. likelihood factors.
  c. forecasting.
  d. historical data.

Question 2

The values for random variables in a Monte Carlo simulation are
 a. selected manually.
  b. generated randomly from probability distributions.
  c. taken from forecasting analysis.
  d. derived secondarily using formulas.


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mmpiza

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Reply #1 on: Jun 24, 2018
Answer to Question 1

d
RATIONALE: The analyst can use historical data and knowledge of the random variable to specify the probability distribution.

Answer to Question 2

b
RATIONALE: Instead of manually selecting the values for the random variables, a Monte Carlo simulation randomly generates values for the random variables so that the values used reflect what might be observed in practice.


cool

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Reply #2 on: Jun 24, 2018
Thank you


mmpiza

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Reply #3 on: Jun 24, 2018
No problemo


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