Question 1

What is the probability that your portfolio's annual return will exceed 20%?

Accepted Answer

The answer of What is the probability that your portfolio's...

Question 2

Which of the following is typically not an application of simulation models?

Accepted Answer

A) Operations models 
B) Financial models 
C) Marketing models 
D) Value of Information models 
E) None of these options

Question 3

RISKMAX and RISKMIN are can be used to find the probability of meeting a given due date in a manufacturing model.

Accepted Answer

A) True 
 B)False

Question 4

In financial simulation models,we are typically more interested in the expected NPV of a project than in the extremes of the outcomes.

Accepted Answer

A) True 
 B)False

Question 5

What is the appropriate distribution for initial market size?

Accepted Answer

The answer of What is the appropriate distribution for initial...

Question 6

Cash balance models are an example of which of the following types of simulation application?

Accepted Answer

A) Operations models 
B) Financial models 
C) Marketing models 
D) Games of chance 
E) None of these options

Question 7

The amount of variability of a financial output caused by different inputs can be investigated using:

Accepted Answer

A) the NPV function 
B) a histogram of the NPV 
C) a tornado chart of NPV 
D) the value at risk (VAR) 
E) All of these options

Question 8

What is the probability that Amanda will have less than $500,000 in her retirement account after 30 years under the more conservative investing strategy?

Accepted Answer

The answer of What is the probability that Amanda will...

Question 9

In a warranty cost modeling model,which of the following is a key input random variable?

Accepted Answer

A) Warranty cost 
B) Warranty time limitation 
C) Lifetime of product 
D) Replacement cost of product 
E) All of these options

Question 10

Suppose again that Amanda will stop investing in the stock market and transfer all of her retirement into a savings account if and when she reaches $500,000.When can she expect to reach this goal under the more conservative investing strategy?

Accepted Answer

The answer of Suppose again that Amanda will stop investing...

Question 11

Using your answers to Questions 69 and 70,and without simulating the model again,estimate how much an extra 5% customer satisfaction is worth to GM.

Accepted Answer

The answer of Using your answers to Questions 69 and...

Question 12

Which of the following @RISK functions can be used to find the probability of a particular value in an output distribution?

Accepted Answer

A) RISKMIN 
B) RISKMAX 
C) RISKPERCENTILE 
D) RISKTARGET 
E) None of these options

Question 13

What does the distribution of the NPV look like?

Accepted Answer

The answer of What does the distribution of the NPV...

Question 14

In a manufacturing model,we might simulate the number of days to produce a batch and the yield from each batch.The number of days would typically be a ___________ distribution and the yield would be a ___________ distribution.

Accepted Answer

A) Continuous,discrete 
B) Continuous,continuous 
C) Discrete,continuous 
D) Discrete,discrete

Question 15

Which of the following functions is often required in simulations where we must model a process over multiple time periods and must deal with uncertain timing of events?

Accepted Answer

A) RISKMIN 
B) RISKMAX 
C) NPV 
D) IF 
E) None of these options

Question 16

Does the answer to Question 72 match your intuition? Explain why or why not.

Accepted Answer

The answer of Does the answer to Question 72 match...

Question 17

A @RISK output range allows us to obtain a summary chart that shows the entire simulated range at once.

Accepted Answer

A) True 
 B)False

Question 18

Although we can determine the optimal bid and the expected profit from that bid in a bidding simulation,we usually cannot determine the probability of winning.

Accepted Answer

A) True 
 B)False

Question 19

For each simulation what is the probability of exceeding $75,000 in NPV (approximate these numbers as closely as possible from the data given in the above table).Please put your answer in the following table:

Accepted Answer

The answer of For each simulation what is the probability...

Question 20

Churn is an example of the type of uncertain variable we deal with in financial models.

Accepted Answer

A) True 
 B)False

Exam 16: Simulation Models

What is the probability that your portfolio's annual return will exceed 20%?

Which of the following is typically not an application of simulation models?

RISKMAX and RISKMIN are can be used to find the probability of meeting a given due date in a manufacturing model.

In financial simulation models,we are typically more interested in the expected NPV of a project than in the extremes of the outcomes.

What is the appropriate distribution for initial market size?

Cash balance models are an example of which of the following types of simulation application?

The amount of variability of a financial output caused by different inputs can be investigated using:

What is the probability that Amanda will have less than $500,000 in her retirement account after 30 years under the more conservative investing strategy?

In a warranty cost modeling model,which of the following is a key input random variable?

Suppose again that Amanda will stop investing in the stock market and transfer all of her retirement into a savings account if and when she reaches $500,000.When can she expect to reach this goal under the more conservative investing strategy?

Using your answers to Questions 69 and 70,and without simulating the model again,estimate how much an extra 5% customer satisfaction is worth to GM.

Which of the following @RISK functions can be used to find the probability of a particular value in an output distribution?

What does the distribution of the NPV look like?

In a manufacturing model,we might simulate the number of days to produce a batch and the yield from each batch.The number of days would typically be a _ distribution and the yield would be a _ distribution.

Which of the following functions is often required in simulations where we must model a process over multiple time periods and must deal with uncertain timing of events?

Does the answer to Question 72 match your intuition? Explain why or why not.

A @RISK output range allows us to obtain a summary chart that shows the entire simulated range at once.

Although we can determine the optimal bid and the expected profit from that bid in a bidding simulation,we usually cannot determine the probability of winning.

For each simulation what is the probability of exceeding $75,000 in NPV (approximate these numbers as closely as possible from the data given in the above table).Please put your answer in the following table:

Churn is an example of the type of uncertain variable we deal with in financial models.