What advantage does scenario analysis have over sensitivityanalysis?

Q: What are the benefits and Flaws of Payback Screening?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: Which Variable Is most critical in Sensitivity Analysis?

A: Sensitivity analysis helps to analyze the project by considering different variables. It helps…

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Explain the types of risk?

A: Introduction: There is a risk involved in any company decision, and in personal life decisions. In…

Q: What is the best-case scenario?

A: When companies are uncertain about the details of a project such as costs, inflows, interest rate…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: What are the differences between MIRR method and IRR method?

A: The question is related to MIRR and IRR.

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: How does the decision-maker use the scenario analysis?

A: Scenario analysis helps investors and analysts in making better decisions.

Q: What assumptions underlie the EOQ model?

A: The model that helps in calculating the optimal amount of quantity needs to be purchase for…

Q: Explain constant prepayment assumptions?

A: Prepayment refers to the settlement of debt before its actual due date. The model which determines…

Q: Sensitivity Analysis Methods

A: Sensitivity analysis is an analysis method that is used to identify how many variations in the input…

Q: What is the Black Scholes Model?

A: Black Scholes Model is an option pricing model.

Q: Describe the Sensitivity Analysis for Mutually Exclusive Alternatives?

A: Sensitivity analysis portrays how various values of an independent factor under a given arrangement…

Q: Describe the method for conducting sensitivity analysis for mutually exclusive alternatives?

A: Sensitivity analysis is a financial model that decides how target factors are influenced by changes…

Q: What is a scenario analysis? What is it designed to show, and how does it differ froma sensitivity…

A: Scenario analysis is the technique of analyzing the portfolio to find out the expected value of…

Q: Why do we need stress testing and scenario analysis?

A: A stress test or scenario analysis is used to determine and analysis the outcome of a financial…

Q: What is performance testing and what are its bottlenecks?

A: It examines financial records, individual transactions, and the processes involved in obtaining and…

Q: What techniques can be used to analyze real options?

A: A choice accessible to the organization's managers related to the investment opportunities is known…

Q: What are the appealing qualities of Payback Screening?

A: The payback method is the simplest way of checking the viability of the project. The payback method…

Q: What are the ramifications of doing a CVP analysis

A: It   is about the ramifications of doing a CVP analysis:

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: is profile measurement and analysis? What are the limitations of this approach?

A:

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash…

Q: What is the criticism for using SMB and HML as risk factors?

A: The Fama and French Three-Factor Model (or Fama French Model for short) is an asset pricing model…

Q: What is the big bang approach?

A:

Q: Why is it more accurate to describe the subject matter as CVP analysis rather than as breakeven…

A: Cost-Volume-Profit Analysis (CVP Analysis): CVP Analysis is a tool of cost accounting that measures…

Q: What role does MAD play in evaluating a forecasting model?

A: MAD refers to mean absolute deviation. It is also known as average absolute deviation which is the…

Q: What is modified breakeven analysis?

A: Break even analysis refers to the financial computation that weights the new business cost, product…

Q: suitable behavioral model?

A: Behavioral Model: Behavioral Model from its name only suggests the study of behavior. The study of…

Q: What are the implications of CVP analysis?

A: The CVP analysis stands for cost volume profit analysis.

Q: d. What is the expected value of perfect information?

A: The expected value of perfect information is the price that a healthcare decision-maker would be…

Q: What does a project’s stand-alone risk reflect?

A: Stand alone risks are risks that are associated with a particular asset or a project. Companies when…

Q: What is the iceberg effect? How can CASE tools help to minimize this phenomenon?

A: The Iceberg Principle or Iceberg Theory is a hypothesis that proposes that we can't see or recognize…

Q: What are some strengths and weaknesses of sensitivity analysis and scenario analysis?

A: Sensitivity Analysis determines how the dependent variable changes when the independent variable…

Q: Explain risk aversion

A: Introduction: Risk can be characterized in terms of the uncertainty of future consequences resulting…

Q: When we work with the breakeven point, how important is it to understand what a decision variable…

A: The question is related to Marginal Costing. The break-even point is that level of sales at which…

Q: How is VaR used to limit risk?

A: Value at Risk (VaR) a statistical tool which measures and quantifies financial risk a firm or…

Q: What is Roll’s critique of CAPM tests?

A: Capital asset pricing model is a model that is used to estimate the expected return on an asset. In…

Q: What is the replacement analysis?

A: Replacement analysis is one of the keys examinations in capital budgeting.

Q: Describe the procedure to obtain the best-case NPW with scenario analysis?

A: Scenario analysis is a technique to break down and survey potential events that may happen later on…

Q: Why is Scenario Analysis useful?

A: Scenario Analysis is a process where various (more than one) input changes are made at the same time…

Q: Explain Prepayment Assumptions?

A: Prepayment model : In simple words, A prepayment model is employed in banking to forecast the amount…