Which of the following statements is correct?
A) Straightforward sensitivity analysis, as it is generally employed, is incomplete in that it fails to consider the range of likely values for the key input variables and the probabilities of different input values.
B) A statistically based behavioural approach to project analysis that applies pre-determined probability distributions is the scenario approach.
C) A method for evaluating a project that uses a number of possible values for a given variable, such as cash inflows, to assess its impact on the firm's return is simulation analysis.
D) Sensitivity analysis is a type of risk analysis that considers both the sensitivity of NPV to changes in key variables and the likely range of variable values.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is correct?
A) Straightforward sensitivity analysis, as it is generally employed, is incomplete in that it fails to consider the range of likely values for the key input variables and the probabilities of different input values.
B) A statistically based behavioural approach to project analysis that applies pre-determined probability distributions is the scenario approach.
C) A method for evaluating a project that uses a number of possible values for a given variable, such as cash inflows, to assess its impact on the firm's return is simulation analysis.
D) Sensitivity analysis is a type of risk analysis that considers both the sensitivity of NPV to changes in key variables and the likely range of variable values.

Which of the Following Statements Is Correct