When We Believe the Event Will Be Extremely Demanding and Will

question 3

Multiple Choice

When we believe the event will be extremely demanding and will put us at risk for damage, we make a(n) ____ appraisal.

• A) caution
• B) alert
• C) danger
• D) threat

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Definitions:

Sensitivity Analysis

Indicates exactly how much net present value will change in response to a given change in an input variable, other things held constant. Sensitivity analysis is sometimes called “what if” analysis because it answers this type of question.

Stand-alone Risk

The risk associated with a specific project or investment, considered independently from the broader company or portfolio risks.

NPV

Net Present Value; a calculation that compares the value of all cash inflows and outflows of a project or investment using a discount rate.

WACC (Weighted Average Cost of Capital)

A calculation of a firm's cost of capital in which each category of capital is proportionately weighted, including equity and debt.