Scenario Analysis

Scenario Analysis is an important tool in the world of management, finance and economics, and is used extensively to make projections for the future. It is the process of estimating the expected value of a portfolio after a given period of time, assuming specific changes in the values of the portfolio’s securities or key factors take place, such as a change in the interest rate. Scenario Analysis is useful to generate a combination of an optimistic, a pessimistic, and a most likely scenario.