What is a 'Sensitivity Analysis'?

Sensitivity analysis is a technique used to determine how different values of an independent variable will impact a particular dependent variable under a given set of assumptions.

Sharper Insight. Smarter Investing. Manage Preferences TERM OF THE DAY Sensitivity Analysis A sensitivity analysis is a technique used to determine how different values of an independent variable impact 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 have on bond prices. Breaking it Down: Sensitivity analysis is also referred to as "what-if" or simulation analysis and is a way to predict the... Read More Related to "Sensitivity Analysis" What are some examples of ways that sensitivity analysis can be used? Understand the concept of sensitivity analysis and learn about the wide variety of disciplines to which it can be applied. Read More How can I apply sensitivity analysis to my investment decisions? Find out how to apply sensitivity analysis to your investment decisions, why sensitivity analysis might be useful and what some of its limitations are. Read More Sensitivity Analysis For Black-Scholes Pricing Model Trading options requires complex calculations, based on multiple parameters. Which factors impact option prices the most? Read More Related Definitions Investment Analyst An investment analyst is a financial professional with expertise in evaluating financial and investment information, typically for the purpose of making buy, sell and hold recommendations for securities. Read More Scenario Analysis As a technique, scenario analysis involves computing different reinvestment rates for expected returns that are reinvested during the investment horizon. Read More Price Sensitivity Price sensitivity is the degree to which the price of a product affects consumers purchasing behaviors. Read More Quadrix A stock valuation system that uses over 100 variables in seven major categories to determine the value of a stock. The overall score for a particular stock is determined by a weighted average of all 100 variables. Read More You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe  |  Manage Subscriptions Investopedia, LLC, A Division of IAC. 114 West 41st St, floor 8, New York NY 10036 Copyright © 2018, Investopedia, LLC. All Rights Reserved Follow Us: