Scenario Analysis of Financial Models
Introduction to Scenario Analysis Scenario Analysis represents the process of calculating an estimation model under a variety of scenarios for the future. The idea behind this analysis method is to assess the effect of risk on values in a financial model. Scenario Analysis helps us outline how realistic are the assumptions in our model and […]
Sensitivity Analysis in Financial Modeling
Introduction to Sensitivity Analysis We apply Sensitivity Analysis to a financial model to determine how different values of an independent variable affect a specific dependent variable under a given set of assumptions. We also refer to it as ‘what-if’ or simulation analysis. Performing such analysis helps us predict better the outcome of a decision, based […]