Monte Carlo Simulation

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DEFINITION of 'Monte Carlo Simulation'

A problem solving technique used to approximate the probability of certain outcomes by running multiple trial runs, called simulations, using random variables.

INVESTOPEDIA EXPLAINS 'Monte Carlo Simulation'

Monte Carlo simulation is named after the city in Monaco, where the primary attractions are casinos that have games of chance. Gambling games, like roulette, dice, and slot machines, exhibit random behavior.

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