The Pros And Cons Of Financial Modelling

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Recommended: The art vs science issue in teaching

Financial Modelling: Risk and Reward
Kenneth H. Adley
Marylhurst University
Real Estate Finance
RES 530 A1
Scott Mazzuca
July 3, 2016
ABSTRACT
The purpose of this paper will be to compare and contrast the summary positions of P. Kamp’s article, The Fundamental Problem with Financial Models (2016) with P. Linneman’s text,
Real Estate Finance and Investments: Risks and Opportunities (2011) regarding financial modelling. Additionally, the pitfalls of financial models will be identified as well as proposed solutions. While financial models are “as much art as science” (Mai, 2011), there are successful strategies to overcome the potential flaws of financial modelling.

Financial Modelling: Risk and Reward
Summary Positions on Financial Modelling by Kamp and Linneman
P. Kamp’s (PK) article, The Fundamental Problem with Financial Models (2016), expresses that most financial models are fairly accurate in providing a good representation of asset or market performance. The drawback, it is only a model. While specifically …show more content…

(2015, February 12). The Pros and Cons of Financial Modelling. Value Edge. Retrieved from http://www.valuewalk.com/2015/02/pros-cons-financial-modelling/

Ehrhardt, M. & Brigham, E. (2011). Financial Management: Theory and Practice (13th Ed.). Mason, OH: South-Western Cengage Learning.

Kamp, P. (2016, March 11). The fundamental problem with financial models. DQYDJ. Retrieved from https://dqydj.com/the-fundamental-problem-with-financial-models/

Linneman, P. (2011). Real estate finance & investments: Risks and opportunities. Philadelphia, PA: Linneman Associates.

Mai, L. (2011, November 30). Building a financial model is as much an art as it is a science. World Press. Retrieved from http://financialmodelingtutorial.com/about/

Okwuduche, C. (2013, February 13). What is sensitivity analysis. Investment & Business Accountants. Retrieved from

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