Sensitivity analysis determines how different values of an independent variable affects a particular dependent variable under a given set of assumptions.
 | | Term of the Day | Words to Know | | |  | | Sensitivity Analysis | A sensitivity analysis determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions. In other words, sensitivity analyses study how various sources of uncertainty in a mathematical model contribute to the model's overall uncertainty. This technique is used within specific boundaries that depend on one or more input variables.
Sensitivity analysis is used in the business world and in the field of economics. It is commonly used by financial analysts and economists, and is also known as a what-if analysis. | | Read More » | | Related to "Sensitivity Analysis" | | | | Risk Analysis | | Risk analysis is the process of assessing the likelihood of an adverse event occurring within the corporate, government, or environmental sector. | | Read More » | | | Sensitivity | | Accounting for every factor impacting a given instrument negatively or positively, sensitivity is the magnitude to which a financial instrument reacts. | | Read More » | | | Monte Carlo Simulation | | Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. | | Read More » | | | Scenario Analysis | | Scenario analysis is the process of estimating the expected value of a portfolio after a given period of time, assuming specific changes in the values of the portfolio's securities or key factors that take place. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
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