When computing Z for a break-even analysis: as σ increases, Z decreases.

Name: When computing Z for a break-even analysis: as σ increases, Z decreases.
Brand: Quizplus
Rating: 4.8 (38 reviews)

Question

Quizplus · Accepted Answer

This is true because Z is calculated as the difference between the expected revenue and the break-even point divided by the standard deviation (Z = (expected revenue - break-even point)/σ). As σ increases, the denominator becomes larger, causing Z to decrease.

When Computing Z for a Break-Even Analysis: as σ Increases