Q. What is a Monte Carlo simulation in the context of finance? What are the shortcomings...

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Q. What is a Monte Carlo simulation in the context of finance? What are the shortcomings of the traditional models used for the following analysis and how does Monte Carlo simulation add value? a. Net Present Value b. Option pricing QThe following regression equation was estimated. How should the results mentioned below be interpreted? What can you comment on the performance of the mutual fund? ** RMF = a + * RNIFTY, where RMF is the monthly returns from the NAV of a large cap mutual fund and RNIFTY is the monthly returns from the NIFTY index. a and 3 are the coefficients in the equation. Number of observations were 36, R-squared was 96%. 4 1 Q. A six faced dice with numbers 1 to 6 on each face was rolled 36 times. Following are the results. What can you comment on the dice? Give evidence. 3 4 2 5 3 2 4 1 6 Estimate p-value 4 a B -0.0154 0.9887 0.1324 0.0019 2 4 1 4 6 5 3 1 6 4 4 2 5 4 2 4 1 3 3 1 2 4 5 4 Q. What is a Monte Carlo simulation in the context of finance? What are the shortcomings of the traditional models used for the following analysis and how does Monte Carlo simulation add value? a. Net Present Value b. Option pricing QThe following regression equation was estimated. How should the results mentioned below be interpreted? What can you comment on the performance of the mutual fund? ** RMF = a + * RNIFTY, where RMF is the monthly returns from the NAV of a large cap mutual fund and RNIFTY is the monthly returns from the NIFTY index. a and 3 are the coefficients in the equation. Number of observations were 36, R-squared was 96%. 4 1 Q. A six faced dice with numbers 1 to 6 on each face was rolled 36 times. Following are the results. What can you comment on the dice? Give evidence. 3 4 2 5 3 2 4 1 6 Estimate p-value 4 a B -0.0154 0.9887 0.1324 0.0019 2 4 1 4 6 5 3 1 6 4 4 2 5 4 2 4 1 3 3 1 2 4 5 4

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Q1 Monte Carlo simulation is a technique used to understand the impact of risk and uncertainty in fi... View the full answer