Your Client Is Considering Transferring $25,000 from His Savings Account

question 106

Essay

Your client is considering transferring $25,000 from his savings account in a local bank paying 2% interest to a bank in Mexico City fully-insured bank paying 3%. What do you advise?

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Definitions:

Scenario Analysis

A process of analyzing future events by considering alternative possible outcomes (scenarios), often used for strategic planning to understand potential risks and opportunities.

Base-case Analysis

An evaluation technique in which the projected performance of a project is calculated under a set of assumptions considered most likely or average.

Sensitivity Analysis

A method employed to ascertain the impact of varying independent variable values on a specific dependent variable, based on certain assumptions.

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes.