Business Continuity Professional Exam Prep

Category - Risk Evaluation & Control

Which of the following can you use a Monte Carlo simulation to model? Select all that apply:
  1. Project cost
  2. Probability of failure
  3. Quality of inputs
  4. Stock market returns
  5. Leadership
Explanation
Answer: A, B, C and E - Yes, you can use a Monte Carlo simulation to model stock returns, as well as cost and probability of failure. It cannot however, tell you anything about the quality of the inputs used to arrive at the results of the simulation.
Key Takeaway: a Monte Carlo simulation is a great tool for modeling financial and risk outcome in probabilistic situations than project management. For instance, one Upward Mobility editor used it to model the probability that an airline would go bankrupt due to plane crashes with various insurance policies.
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Additional Answers

Jose Zarate says:

The answer says C "Quality of inputs" is also correct. However it says: It cannot however, tell you anything about the quality of the inputs used to arrive at the results of the simulation.

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