Monte Carlo Simulation in Risk Analysis of Investment Projects

Simulace Monte Carlo v analýze rizika investičních projektů

Jiří Fotr, Lenka Švecová, Ivan Souček and Lubomír Pešák

Acta Oeconomica Pragensia, 2007, vol. 2007, issue 2, 32-43

Abstract: At present time, when the rate of risk is increasing, achieving higher quality of investment decision-making by integrating risk and uncertainty factors could positively affect economical results and firm's prosperity. Firstly this article characterizes shortcomings of investment decision making connected with over optimism of people, preparing and evaluating investment projects. Important tool, which could contribute to removing, or at least weakening of these shortcomings, represents Monte Carlo simulation. To description of content Monte Carlo simulation in framework of risk analysis, its problem aspects, advantages and disadvantages is devoted main part of the article. The practical illustration of solving real investment problem from the field of oil industry through Monte Carlo simulation is also involved.

Keywords: investment decision-making; risk analysis; Monte Carlo simulation (search for similar items in EconPapers)
JEL-codes: G32 (search for similar items in EconPapers)
Date: 2007
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://aop.vse.cz/doi/10.18267/j.aop.47.html (text/html)
http://aop.vse.cz/doi/10.18267/j.aop.47.pdf (application/pdf)
free of charge

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:prg:jnlaop:v:2007:y:2007:i:2:id:47:p:32-43

Ordering information: This journal article can be ordered from
Redakce Acta Oeconomica Pragensia, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3
http://aop.vse.cz

DOI: 10.18267/j.aop.47

Access Statistics for this article

Acta Oeconomica Pragensia is currently edited by Klára Šimůnková

More articles in Acta Oeconomica Pragensia from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().