Sensitivity Analysis Is a Procedure That Can Be Used in the Capital

question 40

Multiple Choice

Sensitivity analysis is a procedure that can be used in the capital budgeting process to indicate how sensitive the ____ is to changes in a particular variable.

• A) probability
• B) return distribution
• C) net present value
• D) standard deviation

---

Definitions:

Spendthrift Trust

A legal arrangement that prevents the beneficiary's creditors from accessing the trust funds, providing long-term financial security for the beneficiary.

Spendthrift Provisions

Clauses in trust agreements that prevent beneficiaries from squandering their inheritances or creditors from claiming the trust assets.

Trust Corpus

The principal amount or assets held in trust, as differentiated from the income generated by those assets.

Consideration

Something of value exchanged by parties in a contract that induces them to enter into the agreement.