Business and Personal Finance Dictionary

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• MONTE CARLO
  
  When used to analyze the return an investment portfolio is capable of producing, a Monte Carlo simulation generates thousands of probable investment performance outcomes, called scenarios, that might occur in the future. A simulation uses economic data such as a range of potential interest rates, inflation rates, tax rates, and so on, combined in random order. As a result, it can account for the uncertainty and performance variation that's always present in financial markets. Specifically, financial analysts can use Monte Carlo simulations to project whether or not the investments you are making in your retirement accounts are likely to produce the return you need to meet your long-term goals.
  
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