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HELP PLEASE Question Three: 1. Explain the term Monte Carlo Simulation and explain how it is helpful in decision making. 2. Use the mixed congruential

HELP PLEASE

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Question Three: 1. Explain the term "Monte Carlo Simulation" and explain how it is helpful in decision making. 2. Use the mixed congruential method with seed 26 constant multiply 17 increment 45 and modulus100. To generate 10 uniformly distributed random variables on (0,1). 3. Use inverse transform method to generate a random variable with density function --x+1 25xs3 F(x) = x - 2 X 12 35x56 otherwise Question Four: Consider the model, C = N(d,)S, -N(d2)Ke-rt, where In * + ( r + 2) t d1 = avt and d2 = di -ovt. Explain the following terms; i. call option price, F: cumulative distribution function of the normal distribution, iii spot price of an asset, iv . strike price, V . risk-free interest rate, vi. time to maturity and vii. volatility of the asset. State the above model and explain the importance of the model in mathematics of finance

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