As the Degree of Sensitivity of a Project to a Single

question 112

Multiple Choice

As the degree of sensitivity of a project to a single variable rises, the:

• A) Lower the forecasting risk of the project.
• B) Smaller the range of possible outcomes given a pre-defined range of values for the input.
• C) More attention management should place on accurately forecasting the future value of that variable.
• D) Lower the maximum potential value of the project.
• E) Lower the maximum potential loss of the project.

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Definitions:

Paasche Price Index

An economic measure that calculates the change in the level of prices of a basket of goods and services purchased in the current period, compared to a base period, using the quantities bought in the current period.

Laspeyres Price Index

An economic measure that calculates the change in the cost of acquiring a fixed basket of goods and services, based on the prices of those goods and services in a base period.

Laspeyres Price Index

An economic index that calculates the change in the price level of a basket of goods and services based on the prices and quantities consumed in a base period.

Consumptions

The process of using goods and services to satisfy wants or needs, often measured as an important component of economic activity.