hard20 pts · first answer countsrisk-managementquantitative-analysis

Ignoring correlation in a simulation

A Monte Carlo cost model treats steel, cement and labour costs as independent, although all rise with inflation. What is the likely effect?

A.The mean cost will be far too highB.The spread of results is too narrow, understating riskC.The model will not run at allD.Results become more conservative than needed

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Ignoring correlation in a simulation

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