Which of the Following Statements Is Correct

question 34

Multiple Choice

Which of the following statements is correct?

• A) Sensitivity analysis is incomplete because it fails to consider the range of likely values of key variables as reflected in their probability distributions.
• 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 net present value (NPV).
• C) The primary advantage of simulation is that it provides a very accurate point estimate of a project's NPV.
• D) One important benefit of simulation analysis as compared to scenario analysis is that once the analysis is complete, it provides a clear accept/reject decision rule.
• E) Simulation considers only discrete outcomes for a project.

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Definitions:

Manifest Functions

The explicit and intended outcomes or consequences of social institutions and processes.

Empirical Science

A branch of science that relies on observation, experimentation, and evidence-based methodologies to acquire knowledge.

Verstehen

The process of understanding social behavior from the point of view of those engaged in it.

Weber

Refers to Max Weber, a German sociologist and political economist known for his theories on the structure of society, religion, and the development of capitalist economies.