What is meant by the term 'sensitivity analysis'?
A) An assessment of the effect of objective changes on the accuracy of inputs
B) A calculation of what changes are needed in inputs to create a specified change in output
C) Calculation of the dependence of NPV on levels of risk
D) A series of 'what- if' analyses to assess the effects of future changes of predicted profits and other key variables

Question

Quizplus · Accepted Answer

Sensitivity analysis involves conducting 'what-if' scenarios to understand how changes in inputs affect the outputs, such as predicted profits or other key variables. It's a tool used to predict the impact of changes in the variables on the conclusions of a study or model.

What Is Meant by the Term 'Sensitivity Analysis