1) What is a stochastic model? Provide an example.

2) Risk management is a major usage of Monte Carol simulation. True (T) or False (F)?

3) Risk management uses data to assist in decision making to avoid risks that lose money and assists in decision making for opportunities to be more profitable?

4) Taking risks is always bad. True (T) or False (F)?

5) Randomness (generating random values for input) is included in Monte Carlo analysis. True (T) or False (F)?

6) What is Montel Carlo simulation? Provide an example of how it might be used.

7) This problem assumes a normal bell shaped curve. Problem: With a mean of 1000 and a standard deviation of 100, what values of the population would tend to fall within 3 standard deviations of the mean? What percentage of the population would tend to fall within 3 standard deviations of the mean?

8) Monte Carlo sampling selects random values (variates) independently over a short, partial range of the possible values of the entire distribution. Provide your answer: True (T) or False (F) ?

9) What is a sensitivity chart? Provide an example of how it might be used.

10) The Flaw of Averages tells us that the evaluation of a model output using the average value of the input is always equal to the average value of the outputs when evaluated with each of the input values. (T True) or (F-False)?