
134 Practical Spreadsheet Risk Modeling for Management
hardly affecting it at all. This provides guidance about where to concentrate
resources to have the greatest impact on the NPV.
As this model demonstrates, the use of logical statements is a simple, pow-
erful, and often preferred way to incorporate dependencies between uncer-
tain factors.
5.2 Second Example: Collateralized Debt Obligations
Collateralized Debt Obligations (CDOs) lie at the heart of the nancial
meltdown of 2007–2008. CDOs are asset-backed securities that comprised a
number of underlying assets
*
and are divided into different tranches hav-
ing different risk characteri