1. Introduction to Financial Modelling
Definition A model is a program which has been developed to copy the way a system works in real life. It uses mathematical formulas and calculations to predict what is likely to happen based on data recorded about what actually did happen in the past. |
The reason people use modelling and Financial Modelling in particular is that they want to predict the future.
This is done by carefully setting up a model that they think will do this.
I say 'think' because sometimes setting up a complicated financial model is as much an art as science!
This mini-web will cover this topic.