Scenario analysis


Scenario analysis

The use of horizon analysis to project total returns under different reinvestment rates and future market yields.

Scenario Analysis

In risk analysis, the process of considering different, possible outcomes of a decision. Scenario analysis may take a number of forms; for example, a company may consider the various potential returns on an investment and how each will affect the company's other business. Scenario analysis can also be used in policy making: the president can weight potential effects of a tax increase when deciding whether or not it would be beneficial to do so.