Username: LuckyWoman Rating: Asked to: Goro Yang Date Created: 11 Sep 2018 |
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Category | 28 |
Tag | Financial |
Question | What is a 'Sensitivity Analysis'? |
Hello LuckyWoman, A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions. This technique is used within specific boundaries that depend on one or more input variables, such as the effect that changes in interest rates (independent variable) has on bond prices (dependent variable). Sensitivity analysis is also referred to as "what-if" or simulation analysis and is a way to predict the outcome of a decision given a certain range of variables. By creating a given set of variables, an analyst can determine how changes in one variable affect the outcome. |
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