Model

A representation of a real situation using a selected set of simplifying assumptions and relationships.

In finance, financial models are widely used as tools for valuation and to support financial decisions.

An important benefit of well-structured financial models is to facilitate sensitivity analysis.

See also

• Business model
• Decision tree
• Financial model
• Four-corner model
• Model risk
• Modelling
• Mostly positive
• Scenario analysis
• Sensitivity analysis
• Stress test
• Three-corner model