📝 One-liners · 67 cards
Simulation
Define simulation in banking context.
Imitation of real processes on computer/paper to study system behaviour without disturbing actual operations.
Why do banks use simulation models?
Study effects of rate/exchange/cost changes on profits before real-world commitment; evidence-based decisions.
What are two time-handling approaches in simulation models?
Fixed increments (periodic systems) and variable increments (event-driven systems like queues).
State the core principle of Monte Carlo simulation.
Vary controllable variables; sample uncontrollable variables from probability distributions using random numbers.
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