Financial Risk Evaluation by the 'Tree of Probability Decisions' Method

Mariya Bruseva
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Mariya Bruseva: Varna Free University, Bulgaria

from International School for Social and Business Studies, Celje, Slovenia

Abstract: Any enterprise activity is inextricably linked to the concept of 'risk'. Risk assessment – this is a risk degree calculation by qualitative or quantitative methods. Risk analysis can be divided into two complementary types: qualitative and quantitative. Quantitative analysis should allow for numerical determination of the individual risks and risks of the enterprise as a whole. In the work the model of the 'Tree of probability Decisions' method is presented theoretically and its application in calculating the net present value (NPV) and the internal rate of return (IRR), for which calculations are given the results of the financial functions use of MS Excel. The use of the 'Tree of probability Decisions' method allows investment projects to be evaluated in their dynamic aspect. The use of MS Excel for these calculations makes risk assessment easy and accessible as well supporting decisions in the investment process.

Keywords: method 'Tree of probability Decisions'; risk assessment; net present value; internal rate of return; MS Excel (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:isv:mklp11:327-334

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