Use or Not Use : RAND and RANDBETWEEN function in Excel


In financial modelling especially in showing the application of monte-carlo simulation using Excel to the capital budgeting, we use RAND and RANDBETWEEN function.

According to this article, RAND and RANDBETWEEN in Excel doesn’t really generate truly random values. So it is safe to say that those 2 functions in Excel are adequate for casual use and approximately correct, which implicate that we don’t use such function for analysis involving  billion-dollar projects.

Microsoft Excel’s ‘Not The Wichmann-Hill’ random number generators” by B.D. McCullough. Computational Statistics and Data Analysis. (accessed on 13 September 2020)

Excel (and almost any other program) are generating pseudo-random numbers. RANDBETWEEN is only generating discrete numbers.


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