Submitted by christian on Fri, 03/11/2016 - 14:16
The anatomy of a deal is comprised of three basic components: the expected return, upside potential, and downside risk. Another way to describe this is to ask:
- What do I expect to happen?
- What is the best possible scenario?
- What is the worst possible scenario?
The goal is to have a fair expected return, a huge upside, and very little downside.
