Hey, the explaination was amazing. I just had a doubt, is MBS prepayment valuation by Monte Carlo done in the same way? Please make a tutorial of it if possible :)
Using a mathematical model, I have estimated some system parameters using Kalman filter. Now I have to verify whether the proposed system is robust against uncertainties. I have estimated data and true sensor data. How to do Monte Carlo analysis with the above mentioned information?
We are looking for the probability that the sum of the eyes of three dices is higher than or equal to 17 after rolling once. This can be obtained by rolling three sixes which sums to 18, rolling 5 with the first dice and sixes with the other two, rolling 5 with the second dice and sixes with the other two, or rolling 5 with the third dice and sixes with the other two. The last three combinations sum to 17 which also satisfies the condition. So, in total there are 4 combinations of the dices’ eyes that satisfy our condition. I hope this helps.