Which of the Following Is a Strength of the Engineering

question 106

Multiple Choice

Which of the following is a strength of the engineering method of cost estimation?

• A)The method provides a detailed expert analysis of the cost behavior in each account.
• B)The method is based on studies of what future costs should be rather than what past costs have been.
• C)The method uses all the observations of cost data.
• D)The method is relatively easy to use with computer and sophisticated calculators.

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Definitions:

Certainty Equivalent Approach

A method of evaluating investments by adjusting future cash flows to reflect the risk, converting them into certain cash flows in present value terms.

Overlay Approach

A strategy used in investing that manages risk by using various hedging techniques to achieve a desired exposure.

Certainty Equivalent Factor

A concept used in finance to adjust the future cash flows of an investment to account for risk, essentially converting them into a guaranteed cash flow that an investor would accept in place of holding a risky asset.

Value Range

The spread between the highest and lowest values of a financial asset, indicating its volatility and potential for profit or loss.