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:

Neutral Language

Language that avoids biases, emotions, or any form of prejudice, aiming to be objective and inclusive.

Negative News

Informing about unfavorable or disappointing information, events, or outcomes.

Decision Made Fairly

A choice or judgment reached through a process that is just, unbiased, and based on equity.

Bad-News Message

A communication designed to convey information that may be disappointing, unfavorable, or unwanted to the recipient in a sensitive and understanding manner.