Answer: Generation of random numbers from a distribution, Selection of a statistical distribution for key decision variables

## Explanation **Correct Answers: A and B** Both options A and B are steps performed in Monte Carlo simulation but not in historical simulation. **Detailed Analysis:** - **A: Generation of random numbers from a distribution** - This is unique to Monte Carlo simulation. Historical simulation resamples from actual historical data rather than generating random numbers from distributions. - **B: Selection of a statistical distribution for key decision variables** - This is also unique to Monte Carlo simulation. Historical simulation does not require selecting statistical distributions since it uses the empirical distribution of historical data. **Key Differences:** - **Monte Carlo Simulation**: Uses parametric distributions, generates random scenarios, requires distribution selection - **Historical Simulation**: Uses empirical distribution, resamples historical data, no distribution assumptions needed Both steps A and B distinguish Monte Carlo from historical simulation approaches.

Author: LeetQuiz Editorial Team