Explain how simulation works. What is the value in using a simulation approach

Explain how simulation works. What is the value in using a simulation approach?
Paper instructions:
Text: Foundations of Finance: The Logic and Practice of Financial Management
6th Edition, 2008
ISBN-0-13-233922-6
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Use a standard essay format for responses to all questions (i.e. an introduction, middle paragraphs and conclusion).
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Written assignments are judged on the quality of the response in regard to the question. Word count is NOT one of the criteria that is used in assigning points to written assignments. However, students who are successful in earning the maximum number of points tend to submit written assignments that fall in the following ranges:
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Undergraduate courses: 350 – 500 words or 1 – 2 pag