The Difference Between Scenario Analysis and Sensitivity Analysis Is ________

question 88

Multiple Choice

The difference between scenario analysis and sensitivity analysis is ________.

• A) scenario analysis is based upon the internal rate of return (IRR) and sensitivity analysis is based upon net present value (NPV)
• B) only sensitivity analysis allows us to change estimated inputs of net present value (NPV) analysis
• C) scenario analysis considers the effect on net present value (NPV) of changing multiple project parameters
• D) only scenario analysis breaks the net present value (NPV) calculation into its component assumptions

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Definitions:

Par Common Stock

The face value assigned to common stock shares, representing the minimum amount that can be credited to share capital; it is not necessarily indicative of the market value.

Journalize

The act of recording business transactions in the journal, noting the accounts affected and their debits and credits.

Paid-In Capital

The total amount of money shareholders have invested in the company through the purchase of its stock.

Par

The face value of a bond or other financial instrument, often used in reference to its original issue value.