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Which of the following statement is incorrect regarding the Monte Carlo simulation and bootstrapping?
A
In pricing the option, the Monte Carlo simulation assumes a risk-neutral stock price process to simulate the paths.
B
The bootstrap generates observation indices by randomly sampling with replacement.
C
The bootstrapping methods, either naïve or sophisticated, rely upon the underlying assumption that the data are iid.
D
If the specified data generating process does not adequately describe the observed data, then the Monte Carlo simulation may be unreliable.
