The Use of Sensitivity Analysis Requires That _____

question 41

Multiple Choice

The use of sensitivity analysis requires that _____.

• A) all variables affecting NPV be defined
• B) probability distributions of the determinants of a project's cash flows be estimated
• C) the firms have access to a very large computer
• D) the firm is greatly interested in the portfolio risk reduction characteristics of a project

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Definitions:

Trustworthiness

Whether a source will honestly tell you what he or she knows.

Halo Effect

The assumption that because people have one desirable trait (e.g., attractiveness), they also possess many other desirable traits (e.g., intelligence).

Fear-based Messaging

A strategy that uses scare tactics or the threat of negative consequences to influence behavior or attitudes.

Moderate-fear Message

Communication that utilizes a moderate level of fear to persuade or motivate behavior change without overwhelming the audience.