Which of the Following Statements Is CORRECT

question 14

Multiple Choice

Which of the following statements is CORRECT?

• A) One advantage of sensitivity analysis relative to scenario analysis is that it explicitly takes into account the probability of specific effects occurring, whereas scenario analysis cannot account for probabilities.
• B) Well-diversified stockholders do not need to consider market risk when determining required rates of return.
• C) Market risk is important, but it does not have a direct effect on stock prices because it only affects beta.
• D) Simulation analysis is a computerized version of scenario analysis where input variables are selected randomly on the basis of their probability distributions.
• E) Sensitivity analysis is a good way to measure market risk because it explicitly takes into account diversification effects.

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Definitions:

Persuasive Writer

A writer skilled in crafting written content that effectively convinces readers to adopt a specific viewpoint or take a particular action.

Strongest Points

The most compelling or persuasive arguments or aspects in a case or situation.

Weakest Points

The most vulnerable or least strong parts in an argument, structure, or plan.

Persuasive Writer

An individual skilled at presenting arguments or information in written form in a way that influences or convinces readers.