27. September 2016

Glossary

Monte Carlo simulation

The Monte Carlo simulation represents a stochastic model used for forward projections to obtain a forecast value. Simply put, this statistical method generates a limited number of random figures that remains within the parameters or values defined by the person conducting the test. Taking the predefined parameters into account, the simulation produces a large number of results (in this case 1,000). The modelling calculates the probability of occurrence for each result within the range of samples. The range of values itself has a probability of occurrence of 100%. The variables defined for the simulation of this survey include property prices, incidental acquisition costs, construction costs and financing charges.