Better than any other pricing methodology, the stochastic model acknowl-edges that unknown, real world events determine the investor's return andattempts to account for these uncertaintiesA stochastic pricing model integrates the precision of a deterministicmodel with the realistic and flexible expectations of the probabilistic model This is usually accomplished via a Monte Carlo simulation, where repeatedrandom sampling Is used to derive a set of valuesGenerally, several stages of preparation and activity are involved foreach Monte Carlo analysis