Question: Business model and Monte Carlo analysis Use the data and business model from Case 4.2. Required: 1. Adapt the Overlevered business model for Monte Carlo

Business model and Monte Carlo analysis Use the data and business model from Case 4.2.

Required:

1. Adapt the Overlevered business model for Monte Carlo analysis to create a simulated distribution of Overlevered’s 2010 debt to equity ratio. Clearly describe which variables you have chosen to vary randomly and how you have done so.

2. Based on your analysis, what is the probability of Overlevered's violating its debt covenant?

3. Evaluate the risks in the tails of the distribution.

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