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Basic Question 0 of 16
In a Monte Carlo method, interest rate paths are generated based on:
II. volatility assumption.
III. the model itself.
I. probability distribution.
II. volatility assumption.
III. the model itself.
User Contributed Comments 1
| User | Comment |
|---|---|
| myron | The Monte Carlo method is an alternative method for simulating a sufficiently large number of potential interest rate paths in an effort to discover how the value of a security is affected and involves randomly selecting paths in an effort to approximate the results of a complete pathwise valuation. |
I used your notes and passed ... highly recommended!
Lauren
Learning Outcome Statements
describe a Monte Carlo forward-rate simulation and its application.
CFA® 2025 Level II Curriculum, Volume 4, Module 27.