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

Q: Outline the weaknesses of sensitivity analysis

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

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: What is the purpose of carrying out an incremental analysis?

A: Incremental analysis is also known as Relevant cost approach Differential analysis Marginal…

Q: How is sensitivity analysis used to cope with uncertainty in decision making?

A:

Q: What is Scenario Analysis?

A: Scenario analysis is an important step in the financial modelling. This is used to show the possible…

Q: Sensitivity Analysis Methods

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

Q: Why is the variance (or standard deviation) used as a measure of risk? What are the advantages and…

A: Reasons of utilizing variance as a risk measure: While consider a lesser risk in investment, fewer…

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: Describe the Sensitivity Analysis for Mutually Exclusive Alternatives?

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

Q: Define sensitivity analysis

A: The process to evaluate the effect of change in one variable on the end result of a project is…

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: 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 are Required Assumptions and Decision Frameworks for replacement analysis?

A: Replacement analysis:   It is an analysis tool in capital budgeting decisions. An asset life tends…

Q: Describe sensitivity analysis? Give an example?

A: Sensitivity Analysis:The process to evaluate the effect of change in one variable on the end result…

Q: analysis needed

A: Risk Analysis is a process that helps you identify and manage potential problems that could…

Q: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

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

A:

Q: What alternative approaches can be used to estimate variable consideration?

A: The alternative approaches that can be used to estimate variable consideration are: Expected value…

Q: What is the risk of assessing Control Risk too low?

A: Definition:   Tests of controls: Tests of controls form the part of audit procedures to be…

Q: What is risk and give examples

A: While making investment decisions risk and return should be taken into consideration.

Q: How is benchmarking beneficial?

A: Benchmarking is a measure which determines a company's competitive position through comparing its…

Q: What happens when Control Risk is assessed to be at the maximum level?

A: Control risk Control Risk refers to the type of audit risk which evaluates the misstatement of…

Q: Compare judgmental, time series, and causal forecasting models.

A: Judgmental models are the subjective criteria in which gauges are based on master ideas. Individuals…

Q: How are Sensitivty Analysis and Scenario Analysis different in details?

A: Sensitivity analysis is the evaluation of the impact on the project when there may be a few…

Q: Describe the relationship between Simulation analysis, Scenario analysis and Sensitivity analysis –…

A: Sensitivity Analysis refers to an assessment of the impact of the changes in one variable on the NPV…

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: When we perform sensitivity analysis for mutually exclusive alternatives, itmay be more effective to…

A: Net present worth is acknowledged as the current worth or value of a project which is adjusted as…

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: Explain Measures of Variance and Risk?

A: Variance tests normal or normal variability. Variability is volatility for investors, and volatility…

Q: How to minimize or eliminate risk using diversification or other means.

A: Diversification is a process investment in multiple assets with the available amount.

Q: What is the general goal of trend analysis?

A: Trend analysis:   Trend analysis is prepared to make comparison between the previous year's…

Q: What are the two stages in risk assessment?

A: Risk assessment is the process which involves analysis & identification of events that can have…

Q: What are representative strengths of NPO?

A: Non Profit Organisations (NPO) are expected to be driven by a need to fulfill a social purpose…

Q: Discuss the use of sensitivity analysis as a way of evaluating project risk.

A: Sensitivity analysis Sensitivity analysis is said to be an evaluation tool that makes an assessment…

Q: What differential analysis and why would we use it?

A: Decision making is the process of taking the decisions based on the costs and different kind of…

Q: What are some pros and cons of computing an expected return using a user-specified model versus…

A: Expected Return: As opposed to observed returns that are measured at the end of a given period, the…

Q: What is a feasibility study?

A: Feasibility study is a scientific program. Venture achievement proportion  is decided by Project…

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: 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: 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: What are practical weaknesses of NPO?

A: Organizations are described as business units which are established by the individuals, or group of…

Q: For any given distribution of outcomes and probabilities, describe how preferences over risk affect…

A: An outcome is a potential result of an experiment in probability theory. The likelihood of an event…

Q: Brief illustrations and examples for sensitivity analysis

A: Sensitivity analysis is the analysis which considers the impact of change in one variable on the…