Financial model: Difference between revisions
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A simplified representation of a financial situation, using a selected set of assumptions and relationships. | A simplified representation of a financial situation, using a selected set of assumptions and relationships. | ||
Financial models are widely used in practice for valuation and to support financial decisions and risk management. | Financial models are widely used in practice for valuation, and to support financial decisions and risk management. | ||
Models are also a valuable tool in finance coaching and financial education. | Models are also a valuable tool in finance coaching and financial education. | ||
Revision as of 04:16, 31 December 2016
A simplified representation of a financial situation, using a selected set of assumptions and relationships.
Financial models are widely used in practice for valuation, and to support financial decisions and risk management.
Models are also a valuable tool in finance coaching and financial education.
In simple terms, a model:
- Presents a financial calculation (or calculations)
- In a way that enables the user to understand it and to challenge it, especially about its assumptions.
