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Stochastic Processes and Simulation FAQs

Stochastic processes describe systems that evolve with randomness, presenting values that change unpredictably across time steps.

Simulation calculators generate sequences or distributions of outcomes, showing how random variation influences overall system behaviour.

A Markov chain represents transitions between states where each move depends solely on the current state rather than earlier history.

Monte Carlo simulation repeats random sampling many times to approximate possible outcomes, producing a distribution rather than a single estimate.

Mean reversion describes movement toward a long-term central value, with deviations gradually pulled back toward the average over time.