NOT true about simulation models?

Q: Using a wrong formula for CAPM is a __  (select one) a. Erronous model risk b. Market data…

A: Introduction : In simple word, the capital asset pricing model (CAPM) is the valuation model used to…

Q: Outline the weaknesses of sensitivity analysis

A: Sensitivity analysis uses in capital budgeting for measuring the risk in project. It helps in…

Q: Discuss the sensitivity of the model to changes in the value of the input variables

A: It is a technique that is used to get the estimates of independent variables by changing the…

Q: Which of the following is false of the historical VaR?  a. It is based on normal distribution of…

A: Ans. Historical VaR do makes use of Monte Carlo Simulation.

Q: Which of the following is not one of the main issues regarding data collection which can…

A: Data collection is one of the modt fundamental and important steps in any statistical analysis. If…

Q: Which of the following statements is FALSE about "backward thought process'? Statement I. It…

A: a) neither of two statements is false

Q: Explain why NPV is the best criterion and how it overcomes problems inherent in the other methods.

A: The "value derived from the use of money over time as a consequence of investment and reinvestment"…

Q: Why the limitation of portfilio analysis is itsuggests the use of standard strategies that can miss…

A: A portfolio is a collection of various investments. Portfolios are a vital part of a corporation…

Q: What detail would a decision maker require to analyse a dilemma with the expected value? What…

A: Settling on choices is surely the main undertaking of an administrator and it is regularly an…

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: “CVP analysis is both simple and simplistic. If you want realistic analysis to underpin your…

A: CVP analysis refers to the cost-volume-profit analysis which describes the change in the operating…

Q: The scenario analysis technique is versatile and rich. Of all the forecasting techniques, it may be…

A: Scenario analysis - It is mainly used to analyse the pros and cons of  organisational decisions. In…

Q: What are the steps in computing the cost of a prediction error when using the EOQ decision model?

A: Economic Order Quantity (EOQ): Economic order quantity is the quantity of order that is purchased…

Q: The internal rate of return (IRR), despite its shortcomings, can be a useful analysis tool for…

A: IRR is the required rate of return for the project to have zero Net Present value.

Q: Weaknesses of the high-low method include all of the following except:   a. only two observations…

A: Solution: Weaknesses of the high-low method include all of the following except "the mathematical…

Q: Why do conflicts sometimes arise between the netpresent value (NPV) and internal rate of return(IRR)…

A: The basic assumption between NPV and IRR method is the cash flows are reinvested. In the NPV method,…

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 are the Flaws of Payback Screening?

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

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: The value of any model is that it enables the user to make inferences about the real situation.…

A: The values derived from the model are useful for important hypothesis and is relevant in many…

Q: which of the following is not a qualitative characteristic associated with Relevance? a.…

A: Financial statements should be true and fair, for presenting true and fair financial information;…

Q: advantages and disadvantages of the scattergram method as compared to the high-low method?

A: Solution High-low method takes high level activity and low level activity and measure the total cost…

Q: the strengths o

A: Strengths of  scientific approach  Researchers employing survey methods to collect data enjoy a…

Q: Sensitivity analysis is the analysis of the effect of parameter changes on the optimal solution.…

A: Sensitivity analysis is done to understand changes in a target variable when changes are made in…

Q: Compare and contrast the following techniques based on costs and benefits: • Test data method • Base…

A: Costs: Costs are the cash expenses that are spent by individuals to buy an asset and pay for…

Q: Which of the following is a correct? Select one: a. Planned detection risk and inherent risk have an…

A: The audit risk refers to the risk that can not be detected by the auditor of the financial…

Q: The project with the highest IRR may not be the preferred alternative. To illustrate the flaws of…

A: Internal Rate of Return (IRR) is that discounting rate at which Net Present Value of the project is…

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 do you mean by null hypothesis, how to test the hypothesis give the best examples?

A: In common parlance, hypothesis is an assumption regarding anything and that assumption is based on…

Q: Analyze the potential disadvantages of the LCNRV method

A:

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: The process of choosing among competing alternatives is called a. planning.b. decision making.c.…

A: Planning represents the process of identifying goals and plan to achieve those goals. Controlling…

Q: Many decision problems have the following simple structure. A decision maker has two possible…

A: A)-      Consider a generlised decision decision maker,s problem.the cecision maker has to…

Q: What advantage does scenario analysis have over sensitivityanalysis?

A: In finance, we are required to analyze the change in value of one variable over the change in the…

Q: The inputs to a model may have different roles. Among the choices, which should be excluded?…

A: Inputs are main variables for decision making in any model. Inputs influence the output amd the…

Q: How is breakeven analysis different from CVP analysis?

A: Breakeven analysis: It helps to analyze the break-even level of company that is, the level of…

Q: How will management know if one of the hypotheses underlying the balanced scorecard is false?

A: The best way to sort out if the speculation is valid or bogus is by trying it. All the speculation…

Q: Which of the following is NOT an advantage of using sensitivity analysis?

A: Which of the following is NOT an advantage of using sensitivity analysis? A  It identifies the…