Which Three of the Statements Are Advantages of Using Sensitivity

question 21

Multiple Choice

Which three of the statements are advantages of using sensitivity analysis?

• A) It provides information for decision making.
• B) It can be used when making contingency plans.
• C) It identifies the relationships between various unpredictable variables.
• D) It may lead to an indication of where further investigation might be worthwhile.

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Definitions:

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, paid to a class of its shareholders in the form of cash.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues, indicating the company's financial performance over a specific period.

Trading Securities

Financial instruments bought and sold for the purpose of generating profits on short-term fluctuations in price.

Unrealized Gains

Profits that have been achieved on paper from investments but have not yet been sold for cash, and therefore are not reflected in the income statement.