Sensitivity Analysis

question 71

Multiple Choice

Sensitivity analysis

• A)considers how sensitive the decision maker is to risk.
• B)considers how changes in the number of states of nature can impact the recommended decision.
• C)considers how changes in various aspects of the problem affect the recommended decision alternative.
• D)None of these are correct.

---

Definitions:

Put Option

This contract permits a person to have the option, without being compelled, to sell a certain amount of a base asset at a fixed price within a designated timeframe.

Call Delta

Measures the sensitivity of an option's price to a change in the price of the underlying asset, reflecting how much the price of the option is expected to change for a small change in the asset price.

Portfolio A

A collection of financial investments like stocks, bonds, and cash equivalents held by an institution or a private individual.