Question
In: Finance
What is the primary difference between a sensitivity and a scenario analysis? A) in a sensitivity...
What is the primary difference between a sensitivity and a scenario analysis?
A) in a sensitivity analysis, you allow one assumption to differ from the expect level at a time. In a scenario analysis, you allow at least two assumptions to differ from the expected level at the same time.
B)In a sensitivity analysis, you allow one assumption to differ from the expected level at a time. In a scenario analysis, you solve for the value of one assumption that would lead the project to have a negative value.
C)In a sensitivity analysis, you solve for the value of one assumption that would lead the project to have a negative value. In a scenario analysis, you allow one assumption to differ from the expected level at a time.
D)In a sensitivity analysis, you allow at least two assumptions to differ from the expected level at the same time. In a scenario analysis, you allow one assumption to differ from the expect level at a time.
E)In a sensitivity analysis, you allow at least two assumptions to differ from the expected level at the same time. In a scenario analysis, you solve for the value of one assumption that would lead the project to have a negative value.
F)In a sensitivity analysis, you solve for the value of one assumption that would lead the project to have a negative value. In a scenario analysis, you allow at least two assumptions to differ from the expected level at the same time.
Solutions
Expert Solution
Option A is correct.
The difference between the two methods is that sensitivity analysis examines the effect of change in just one variable at a time. On the other hand, scenario analysis assesses the effect of change in multiple (atleast two) at the same time.
jeff jeffy answered 2 years agoRelated Solutions
What is the essential difference between sensitivity analysis and scenario analysis? type please 50 words at...
What is scenario analysis? Differentiate between sensitivity analysis and scenario analysis. What advantage does scenario analysis...
1. What is the difference between scenario analysis and sensitivity analysis? How might you use each...
1) what are sensitivity and scenario analysis and be able to distinguish between the two analyses.
Explain the purpose of and differences between sensitivity and scenario analysis Thanks
what are the drawbacks of sensitivity analysis, scenario analysis and break-even analysis? are they reliable in...
What is the reason to do breakeven, sensitivity, scenario, and probabilistic analysis?
Compare and contrast scenario analysis, sensitivity analysis, and simulation analysis.
What are sensitivity analysis, scenario analysis, break-even analysis, and simulation? Why are these analyses important, and...
Describe the benefits and limitations of both Sensitivity Analysis and Scenario Analysis
- What are Foyal's five management functions? Identify which organizational units accomplish these functions in your airport...
- An air conditioning unit, where water condensation is allowed, cools 9,791 m3 / min of humid...
- how do u calculate value of a bond You consider purchasing $1000 face value 7 year...
- Why am I getting this error using 000webhost , but I do not get this error...
- Why are FPGAs used over other programmable Devices such as the GAL chip?
- Examine the fiscal policies in place at the start of your specific time period of 2000-2010...
- Consider the given matrix (the top 250 rated movies according to IMDB). Consider a sample consist...