An analytical method that uses a computer to quickly examine a large number of scenarios and obtain probability estimates for various values in a financial analysis is known as:
A) risk analysis.
B) credit analysis.
C) capital structure analysis.
D) simulation analysis.

Question

Quizplus · Accepted Answer

The analytical method described in the question is simulation analysis, which involves using a computer to generate a large number of scenarios and estimate probabilities for various outcomes. This is a useful tool for financial analysis because it allows for a deeper understanding of the range of potential outcomes and the risks associated with different strategies. Risk analysis, credit analysis, and capital structure analysis are all important aspects of financial analysis, but they are distinct from simulation analysis.

An Analytical Method That Uses a Computer to Quickly Examine