Which of the following are viable techniques to cope with the uncertainty inherent in realistic financial projections?
I.Simulation
II.Ad hoc adjustments
III.Scenario analysis
IV.Sensitivity analysis
A) II and IV only
B) III and IV only
C) II,III,and IV only
D) I,II,and III only
E) I,III,and IV only

Question

Quizplus · Accepted Answer

Simulation, scenario analysis, and sensitivity analysis are all recognized techniques for coping with uncertainty in financial projections. Simulation allows for the modeling of different outcomes based on varied inputs. Scenario analysis examines the impacts of different specific scenarios on outcomes. Sensitivity analysis looks at how changes in one or more input variables affect the outcome. Ad hoc adjustments are not considered a systematic or reliable method for dealing with uncertainty.

Which of the Following Are Viable Techniques to Cope with the Uncertainty