Scenario Analysis Is Different Than Sensitivity Analysis

question 75

Multiple Choice

Scenario analysis is different than sensitivity analysis:

• A)as no economic forecasts are changed.
• B)as several variables are changed together.
• C)because scenario analysis deals with actual data versus sensitivity analysis which deals
• With a forecast.
• D)because it is short and simple.
• E)because it is a "by the seat of the pants" technique.

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Definitions:

Actual Return

The real gain or loss experienced on an investment, typically expressed as a percentage of the investment's initial cost.

Portfolio Beta

This measures the sensitivity of a portfolio's returns to changes in the market's returns, indicating the portfolio's overall exposure to market risk.

Commodity Prices

Commodity prices are the market prices for raw materials such as gold, oil, and agricultural products, influenced by supply and demand factors.

GDP Changes

The alterations in the Gross Domestic Product of a country, indicating the rate of growth or decline in the economy over a period.