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CFA Level 2
Topic: Quantitative Methods
Reading: Excerpt from “Probabilistic Approaches: Scenario Analysis, Decision Trees, and Simulations”
Part 2 of video can be found here: /watch/0645eG_xg1Ax5
Link to Paper: http://people.stern.nyu.edu/adamodar/pdfiles/papers/probabilistic.pdf
Damodaran's paper on "Probabilistic Approaches: Scenario Analysis, Decision Trees, and Simulation" is one of the required readings in the CFA Level 2 syllabus in the Quantitative Methods topic.
In this video, I will show how a simulation can be implemented in Excel using the data table. The results in Damodaran's paper was generated using Crystal Ball, an Excel add-in which requires a license (has a free trial).
The example used is on the valuation of a new store by Home Depot that will have a life of 10 years.
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