- CFA Exams
- CFA Level I Exam
- Topic 9. Portfolio Management
- Learning Module 41. Measuring and Managing Market Risk
- Subject 1. Value at Risk
CFA Practice Question
The main disadvantage of the Monte Carlo simulation is that is ______.
B. cannot accommodate portfolios with embedded options.
C. can be complex and time-consuming to use.
A. is based on the assumption that history will repeat itself, from a risk perspective.
B. cannot accommodate portfolios with embedded options.
C. can be complex and time-consuming to use.
Correct Answer: C
The Monte Carlo simulation method is extremely flexible but can be complex and time-consuming to use.
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