Now that we've understood the functions of a business, it's time to move onto some technical concepts. In this section, we will learn about AI modeling techniques, including Monte Carlo simulation, the logistic regression model, decision trees, and neural networks.
Monte Carlo simulation
Monte Carlo simulation uses heavy computation to predict the behavior of objects by assuming random movements that can be described by probability. This approach is a standard tool that's used to study the movements of molecules in physics, which can only be predicted with a certainty of the movement pattern, which is described by probability.
Finance professionals adopt this method to describe the pricing movement of securities. We will use it to simulate pricing in the Funding the loan using reinforcement learning section, later in this chapter.
The logistic regression model
The logistic regression model is one of...
