Scenario Analysis Is Different Than Sensitivity Analysis

question 98

Multiple Choice

Scenario analysis is different than sensitivity analysis:

• A) because no economic forecasts are changed.
• B) because 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:

Interest Rate

The portion of a loan incurred as interest by the borrower, generally stated as an annual percentage of the loan yet to be repaid.

Payments

Transactions of money or its equivalent from one individual, business, or entity to another as a form of exchange or settlement.

Use Of Money

The concept referring to the opportunity cost of holding money without earning interest, or the benefits foregone by not investing or spending it.

Investment

The allocation of resources, usually financial, in the expectation of a future return. This can include investing in stocks, bonds, real estate, or other financial assets.