Generating Random Numbers with Specified Distributions
Simulation and valuation of finance instruments require numbers with speci- fied distributions. For example, in Section 1.6 we have used numbers Z drawn from a standard normal distribution, Z ~ N(0, 1). If possible the numbers should be random. But the generation of “random numbers” by digital computers, after all, is done in a deterministic and entirely predictable way. If this point is to be stressed, one uses the term pseudo-random1.
KeywordsGenerate Random Standard Normal Variate Parallel Straight Line Monte Carlo Integration Normal Deviate
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