Introduction to the Monte Carlo Simulation

Introduction to the Monte Carlo Simulation

Abdulla explains the significance of the Monte Carlo Simulation: what it tries to achieve and how it works. In so doing, Abdulla provides an example using an excel spreadsheet.
Overview

The Monte Carlo Simulation is a technique used to stimulate potential changes to a value, a price, or any number, usually over a number of time periods. It has a wide variety of applications, some of which include: stock prices and inflation rates.

Key learning objectives:

  • What is the Monte Carlo Simulation?

  • What are some of its uses in financial markets?

  • How does the simulation work in practice?

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Summary
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Expert
Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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