Risk Analysis in Investment Appraisal

Savvakis C. Savvides

Finance from EconWPA

Abstract: This paper was prepared for the purpose of presenting the methodology and uses of the Monte Carlo simulation technique as applied in the evaluation of investment projects to analyse and assess risk. The first part of the paper highlights the importance of risk analysis in investment appraisal. The second part presents the various stages in the application of the risk analysis process. The third part examines the interpretation of the results generated by a risk analysis application including investment decision criteria and various measures of risk based on the expected value concept. The final part draws some conclusions regarding the usefulness and limitations of risk analysis in investment appraisal.

Keywords: Risk Analysis; Monte Carlo simulation; Investment appraisal; Project analysis; Forecasting and simulation; Business administration (search for similar items in EconPapers)
JEL-codes: D81 O22 G31 F47 M10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-cmp, nep-fin and nep-rmg
Date: 2004-09-07
Note: Type of Document - pdf; pages: 33
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http://129.3.20.41/eps/fin/papers/0409/0409020.pdf (application/pdf)

Related works:
Working Paper: Risk Analysis in Investment Appraisal (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0409020

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