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Monte carlo simulation
1.
Monte Carlo Simulation
Adapted From Law and Kelton
2.
3.
4.
To use simulation,
let Y be that random variable (b-a)g(X), where X is a continuous random variable distributed uniformly on [a,b]. Thus, = I
5.
But, E(Y) can
be estimated using the concept of the sample mean . Thus,
6.
Ex. Evaluate
(Answer is 2). n 10 20 40 80 160 2.213 1.951 1.948 1.989 1.993
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