Introduction to Probability Distributions in Financial Modeling
In one of our recent articles, we looked into how to set up and run Monte Carlo Simulations in Excel. And we looked at some of the most common probability distributions, which we can apply to illustrate the uncertainty of our model’s variables. When we work on a financial model, we face issues with variables […]
Monte Carlo Simulation in Financial Modeling
Whenever we are constructing a financial model, we rely heavily on assumptions. Some, if not all, of those assumptions, have the associated uncertainty and inherent risk. Not being able to predict the future makes it harder to solve and model the probability of different outcomes from our financial models. In such situations, we can apply […]
Decision Trees in Financial Analysis
Introduction to Decision Trees We use Decision Trees to clarify the expected value of capital investment opportunities. Decision Trees can also be helpful in business operations, where companies continuously struggle with big decisions on product development, operations management, human resources, and others. With Decision Tree analysis, we can better evaluate the alternative options. However, we […]