The Evaluation of Risk in Business Investment

The Evaluation of Risk in Business Investment

1st Edition - October 1, 1980

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  • Author: J.C. Hull
  • eBook ISBN: 9781483296296

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Provides finance specialists in industry and students of management with a comprehensive set of practical procedures for evaluating the total risk in the major capital investment decisions facing a business. It discusses in detail how companies can make effective use of sensitivity analyses, risk simulations and other techniques, and deals in depth with important issues, such as: How should the results of a sensitivity analysis be interpreted?; How can adequate subjective probability distributions be obtained? How can dependencies between variables be dealt with in a practical way?; The emphasis throughout is on 'how to do it' and the reader needs only a slight knowledge of statistics. A particularly important feature of the book is the FORTRAN subroutines in Appendices A and B which the author prepared for calculating risk evaluations


Operational research and finance specialists in industry, practising managers. Business school courses and postgraduate students of capital budgeting, engineering economics decision analysis, business administration, finance, accounting, and operational research

Table of Contents

  • (partial) The basic principles of investment appraisal

    Some procedures for quantifying risk

    Forecasting and the assessment of subjective probability distributions

    Dealing with dependence in risk simulation

    The results from a sensitivity analysis

    Sequential investment decisions

    Risk and return: some theoretical ideas

    Case study

    Introducing risk evaluation into an organisation

    Appendix A: a computer program for carrying out sensitivity analyses

    Appendix B: a computer program for carrying out risk simulations

    Appendix C: a sampling scheme for dealing with dependent variables

Product details

  • No. of pages: 177
  • Language: English
  • Copyright: © Pergamon 2014
  • Published: October 1, 1980
  • Imprint: Pergamon
  • eBook ISBN: 9781483296296

About the Author

J.C. Hull

Affiliations and Expertise

Cranfield School of Management, UK

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