## Risk **Modeling**

This course covers Monte Carlo Simulation with the Palisade @RISK Add-In and consists of 50 topics.

Introduction to @Risk –

**In this video we use the classic news-person problem with discrete demand to introduce Monte Carlo Simulation with @RISK.**Simulations With The Normal Random Variable –

**In this video we solve the classic news-person problem with normal demand to introduce Monte Carlo Simulation with @RISK. We also illustrate the different graphs that can be used to summarize an @RISK simulation.**Using Riskstatistical Functions –

**In this video we show how to use the RISKMEAN and RISKSTDDEV functions to update the mean and standard deviations of a simulation as the simulation is run.**Introduction To Capital Budgeting And The Triangular Random Variable –

**In this video we use @RISK and the triangular random variable to determine if GM should produce a new car.**Modeling The Product Life Cycle And Sensitivity Analysis With @Risk –

**In this video we show how to model sales volume over time using the product life cycle and explain how @RISK can be used to determine the input random variables that have the most influence on simulation output cells.**RiskGeneral Random Variable –

**In this video we show how the RISKGENERAL random variable can be used to model a continuous random variable.**The RiskCumul Random Variable –

**In this video we show how the RISKCUMUL function can be used to model a continuous random variable.**The RISKTRIGEN Random Variable –

**In this video we show how the RISKTRIGEN function is used to generalize the triangular random variable.**Statistical Analysis Of @Risk Outputs –

**In this video we show how to find a 95% confidence interval for the average value of a simulation output cell and a range that includes 95% of the actual values for an @RISK output cell.**Should We Drill For Oil? –

**In this video we ask the question, “How can we use @RISK to determine whether it is a good idea to drill for oil?”**The Scenario Approach To Capital Budgeting –

**In this video we show how uncertain market share and development expenses can be modeled by defining scenarios for product acceptance.**Plugin Means For Option Pricing –

**In this video we use a simple option pricing example to show that replacing a random future stock price by its mean does not yield the correct mean for the output cell (cash flow from the option).**Valuing An Acquisition –

**In this video we show how to value an acquisition, including the concept of Terminal Value.**Using @Risk’S Goal Seek Capability –

**In this video we use @RISK’s Goal Seek Capability to determine the terminal growth rate that makes an acquisition a good deal.**Simulating The NBA Finals-

**In this video we show how to determine the chance that a team wins a best of 7 NBA series. We also determine the probability that the series will go 4, 5, 6, or 7 games.**Simulating Craps –

**In this video we show how to determine the chance of winning at craps.**Three Dimensional Random Walk –

**In this video we analyze a three dimensional random walk and show that like Charley on the MTA (Kingston Trio) you may never return!**Birthday Problem –

**In this video we show that with 23 people in the room there is a 50-50 chance that at least two people have the same birthday.**Finding Your Best Partner –

**In this video we show how to determine how many people to interview in order to maximize your chance of finding your best partner.**Calculating Poker Probabilities –

**In this video we use @RISK to determine the chance of getting one pair, two pair, or a full house in 5 card draw poker.**The Optimal Bid –

**In this video we show how @RISK can be used to determine the optimal bid on a construction project.**Introduction To RISKOPTIMIZER-

**In this video we show how RISKOPTIMIZER allows you to generalize a RISKSIMTABLE and solve for the order quantity of calendars that maximizes expected profit in the presence of uncertain demand.**Multi-Product Newsperson Problem –

**In this video we use RISKOPTIMIZER to solve a multi-product newsperson problem.**Scheduling Hospital Nurses –

**In this video we find the minimum number of nurses needed to ensure that during during a week there is at most a 5% chance of not having enough nurses.**Bid Optimization With RISKOPTIMIZER –

**In this video we show how to use RISKOPTIMIZER to determine a bid that maximizes expected profit in the presence of uncertainty.**Rescuing The Iran Hostages –

**In this video we show how @RISK could have increased the chances of a successful rescue of the hostages during the 1980 Iran Hostage Crisis.**Sequencing Jobs With Uncertain Duration –

**In this video we use RISKOPTIMIZER to sequence jobs of uncertain duration to minimize the expected number of late days.**Choosing A Portfolio Of Capital Budgeting Projects –

**In this video we use RISKOPTIMIZER to choose a subset of capital budgeting projects that meet a spending constraint.**Modeling Correlated Random Variables –

**In this video we show how to use the RISKCORRMAT function to model correlated (non-independent) random variables. You will also learn how to overlay multiple simulation outputs on a single graph.**Creating Multiple Instances of Correlations –

**In this video we show how you can create multiple instances of correlated random variables. For example, the percentage change in the price of each of 4 stocks on day N may be correlated, but none of the day N percentages are correlated with any other day.**Generating Future Investment Scenarios –

**In this video we use re-sampling to generate future scenarios for returns on important asset classes.**Optimal Portfolios Using Var And Sharpe Ratio –

**In this video we show how to find portfolios that optimize Value at Risk (VAR) and the Sharpe Ratio.**Optimal Portfolios Using Stress Testing And Downside Risk –

**In this video we show how to find portfolios that maximize a portfolio’s worst case or minimize a portfolio’s downside risk.**Optimal Portfolios Controlling A Portfolio’S Beta Or Conditional Var –

**In this video we show how to find portfolios that control risk by setting the portfolio’s Beta or maximizing the portfolio’s Conditional VAR.**Fitting A Discrete Distribution To Data –

**In this video we use @RISK’s Distribution Fitting Feature to show that goals scored in an NHL game follow a Poisson random variable.**Fitting A Continuous Random Variable To Data –

**In this video we use @RISK’s Distribution Fitting Feature to show that the margin of victory in an NFL game follows a normal random variable.**The Winner’s Curse –

**In this video we show how to incorporate the Winner’s Curse into your optimal bidding strategy.**The Black-Scholes Option Pricing Formulas –

**In this video we show how to use the Black-Scholes formula to price European call and put options.**Using The Lognormal Random Variable To Simulate Stock Prices –

**In this video we show how to use financial data from Yahoo.com and the Lognormal random variable to model future stock prices.**Butterfly or Straddle? –

**In this video we discuss the relative merits of a Butterfly or Straddle strategy involving options of Microsoft stock.**Introduction To Utility Theory –

**In this video we show how utility functions can be used to make decisions under uncertainty which incorporate the decision-maker’s attitude towards risk.**Exponential Utility –

**In this video we describe how to use the exponential utility function to model a decision-makers attitude towards risk.**Asset Allocation Via Expected Utility –

**In this video we show how to use utility theory to tailor an asset allocation to a decision-makers attitude towards risk.**Project Management With @Risk –

**In this video we show how to use @RISK to model the uncertain duration of a project.**Finding The Probability That Activities Are Critical –

**In this video we use @RISK to estimate the probability that each of a project’s activities are critical.**Introduction To Re-Sampling –

**In this video we show how re-sampling can be used to replace many hard to remember statistical hypothesis tests.**Is a New Cancer Drug Worthwhile? –

**In this video we use re-sampling and results from 12 patients to show a new cancer drug is a significant improvement over an old cancer drug.**Was The 1970 Draft Lottery Fair? –

**In this video we use re-sampling to show that the 1970 draft lottery was not random.**Beta Re-Sampling –

**In this video we use re-sampling to show that there is an 80% chance that Dell has the highest beta among a list of 6 stocks.**A Bidding Paradox –

**In this video we use @RISK to resolve a bidding paradox.**Heads Or Tails? –

**In this video we show that when tossing a coin repeatedly it is much more likely that THH comes before HHH.**Should We Have Known Madoff Was A Fraud? –

**In this video we use the Sharpe Ratio and re-sampling to to show that the SEC should have realized well before 2008 that Madoff’s fund was a fraud.**How to Hedge FX Risk?-

**In this video we use @RISK to show how a company can hedge FX risk.**Fashion Ordering Part One –

**In this video we use RISKOPTIMIZER to determine how a fashion retailer can maximize expected profit when early sales of a product are a good indicator of future demand.**Fashion Ordering Part Two –

**In this video we continue our discussion on fashion ordering.**Introduction To Supply Contracts –

**In this video we introduce a simple supply chain where coats are manufactured in Asia for a US retailer.**Buyback Contracts –

**In this video we show that when the manufacturer is willing to buy back leftover coats both the retailer and manufacturer benefit.**Revenue Sharing Contracts –

**In this video we show that if the retailer shares some revenue with the manufacturer and the manufacturer reduces the wholesale price, then the performance of the supply chain improves.**Optimizing The Whole Supply Chain –

**In this video we show how buy back and revenue sharing contracts drive the supply chain to maximize expected profit.**Pricing Path dependent options by Simulation –

**In this video we show how to use simulation to price path dependent options.**Risk Neutral Valuation –

**In this video we show how simulation and the risk neutral approach to asset valuation allow us to use simulation to price a European call and put option.**