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Financial modeling - Essay Example

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College
Essay
Finance & Accounting
Pages 7 (1757 words)

Summary

With the advent of technology and computer, many models nowadays are calculated and evaluated using computer software which makes the whole process easy and faster. It is a fact that in a competitive world, companies should be able to make fast, timely and accurate investment decisions…

Extract of sample
Financial modeling

But this is not to say that financial modeling cannot be performed manually.There are various financial models that a company can use in evaluating its investment projects. The only challenge for the company is to identify the model that will provide the most accurate information that can help the company make the right decision.With the advent of technology and computer, many models nowadays are calculated and evaluated using computer software which makes the whole process easy and faster. It is a fact that in a competitive world, companies should be able to make fast, timely and accurate investment decisions. But this is not to say that financial modeling cannot be performed manually.There are various financial models that a company can use in evaluating its investment projects. The only challenge for the company is to identify the model that will provide the most accurate information that can help the company make the right decision.Some of there models include Value- at- risk models, Interest rate models, Equity pricing models, Asset allocation models, Trading models, Investment portfolio models that can be used on equity or derivatives, Business simulation models that include Monte Carlo simulation and binary free and genetic algorithms used in optimization decisions.This is a model of calculating the probability of a collection of investment securities generating returns more than the anticipated. It is a model of analyzing past market performance, security correlation and the security movements. ...
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