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#1
12-16-2008, 09:45 AM
 stanley Join Date: Nov 2008 Studying for ever Posts: 20 Blog Entries: 2
EOM1 Base Scenario

Hi guys,

How did you guys start the sensitivity test for the duration? I am not sure what "base scenario" to use. Here are my options

1. int=0, inf=0, cont=15% (ORIGINAL PROBLEM)
2 int=6, inf=0, cont=15%
3. int=6%, inf=equivalent inf to 15% contingency, cont=0

I am inclined to used the first option since these are the given at the start but statement number 4 in the memo states that "Sensitivity test the discount rate assp of 6% by assuming it changes to either 5 or 7." Which make me think that my "base scenario" could also be number 2 or 3.

Last edited by stanley; 12-16-2008 at 09:49 AM..
#2
01-04-2009, 05:13 PM
 Mr Wadsworth Member SOA AAA Join Date: Jan 2009 Location: Midwest Studying for Life Favorite beer: Guinness Posts: 39

I started the sensitivity test with my assumptions that I justified in my memo. I think it is less important what you start with as your base scenario than how well you justify yourself and caveat around the results based on your assumptions.

Last edited by Mr Wadsworth; 01-04-2009 at 05:13 PM.. Reason: typo

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