A common approach of estimating the variability of returns involving the forecast of pessimistic, most likely, and optimistic returns associated with an asset is called ________.
A) marginal analysis
B) scenario analysis
C) break-even analysis
D) DuPont analysis

Question

Quizplus · Accepted Answer

Scenario analysis involves estimating the variability of returns by considering different scenarios or situations that could occur. This approach typically involves forecasting pessimistic, most likely, and optimistic returns associated with an asset, which can help investors understand the potential range of outcomes and associated risks. Marginal analysis involves examining the incremental costs and benefits of a decision, while break-even analysis involves identifying the point at which revenues and costs are equal. DuPont analysis is a method of financial analysis that breaks down a company's return on equity into different components to help identify areas of strength or weakness.

A Common Approach of Estimating the Variability of Returns Involving