Now that
we've covered a basic understanding of Monte
Carlo concepts, it's time to build the first
Monte Carlo simulation worksheet.
This first
example will simulate a single coin toss.
In order to determine the probability of the
coin landing headsup or tailsup, we will
repeat the simple coin toss many times, then
calculate the percentage of those tosses
that yield heads.
First we enter
the formula simulating a single toss,
"=RANDBETWEEN(0,1)", as illustrated in cell
A6 below.
Next, we copy
cell A6 one thousand times, filling cells A6
through A1006. To do this, make sure
cell A6 is highlighted, then press CTRL+C to
copy its contents to the clipboard.
Next, hold down the SHIFT key while pressing
PAGE DOWN repeatedly until the selected
region reaches cell A1005. Then press
ENTER, and the contents of the clipboard
will be pasted into the entire range.
Now we'll
calculate the results. In cell B3,
enter the formula "=AVERAGE(A6:A1005)".
Format the cell to show results as a
percentage. The result should be
somewhere near 50%.
This is, in
fact, a Monte Carlo simulation in its
simplest form. The "Average" function
shows you that approximately 50% of the coin
tosses will result in "heads".
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