Which of the Following Statements Is CORRECT

question 41

Multiple Choice

Which of the following statements is CORRECT?

• A) Sensitivity analysis as it is generally employed is incomplete in that it fails to consider the probability of occurrence of the key input variables.
• B) In comparing two projects using sensitivity analysis,the one with the steeper lines would be considered less risky,because a small error in estimating a variable such as unit sales would produce only a small error in the project's NPV.
• C) The primary advantage of simulation analysis over scenario analysis is that scenario analysis requires a relatively powerful computer,coupled with an efficient financial planning software package,whereas simulation analysis can be done efficiently using a PC with a spreadsheet program or even with just a calculator.
• D) Sensitivity analysis is a type of risk analysis that considers both the sensitivity of NPV to changes in key input variables and the probability of occurrence of these variables' values.
• E) As computer technology advances,simulation analysis becomes increasingly obsolete and thus less likely to be used than sensitivity analysis.

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Definitions:

Appropriate Behavior

This describes actions that are considered acceptable or proper in a given context, often aligned with societal or organizational norms and expectations.

Ignoring

A behavioral strategy where no attention or reinforcement is given to a certain behavior, with the aim of reducing or eliminating it.

Inappropriate Behavior

Actions or conduct that are not suitable or acceptable in a given context or situation, often violating social norms or expectations.

Generalized Conditioned Reinforcer

A specific type of conditioned reinforcer. Generalized conditioned reinforcers can be exchanged for a virtually limitless amount of items and activities. Money is the prototypic example.