
38 Practical Spreadsheet Risk Modeling for Management
This is a common insight provided by a risk analysis: There is a trade-
off between risk and return. Expected prots are higher (by about $330,000)
when we fully subsidize the handset than if we only offer a partial sub-
sidy, but we are exposed to more risk. (The standard deviation rises by
around $86,000.)
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We will further explore the use of Monte Carlo simulation by returning to
our retirement example from the beginning of this chapter.
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In Chapter 7, we will discuss stochastic optimization, which could be used in this situation
to examine whether there may be a “best” pr ...