Which one of the following descriptions is representative of scenario analysis?
A) One variable at a time is allowed to change.
B) It isolates the unknowns that belong in the model.
C) Different combinations of variables are analyzed.
D) It represents the "top-down" approach.

Question

Quizplus · Accepted Answer

Scenario analysis involves analyzing different combinations of variables to see how they might impact a particular outcome or decision. It is a bottom-up approach, as it considers multiple variables simultaneously rather than isolating them one at a time. Option A describes sensitivity analysis, option B refers to model building, and option D is not accurate as scenario analysis is not necessarily a top-down approach.

Which One of the Following Descriptions Is Representative of Scenario