Why should I choose AnalystNotes?
AnalystNotes specializes in helping candidates pass. Period.
Basic Question 2 of 4
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 am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe a Monte Carlo forward-rate simulation and its application.
CFA® 2025 Level II Curriculum, Volume 4, Module 27.