17. Which of the following statements is CORRECT? a. Sensitivity analysis is a g

ID: 2628468 • Letter: 1

Question

17. Which of the following statements is CORRECT?

a. Sensitivity analysis is a good way to measure market risk because it explicitly takes into account diversification effects.

b. One advantage of sensitivity analysis relative to scenario analysis is that it measures the effect of each individual assumption.

c. Corporations do not need to consider market risk when evaluating projects.

d. Scenario analysis is a computerized version of scenario analysis where input variables are selected based on their probability distributions.

18. Which of the following is an example of a timing option?

a. A company has the option to invest in a project today or to wait a year.

b. A company has the option to back out of a project that turns out to be unproductive.

c. A company pays a higher cost today in order to be able to reconfigure the project

17. Which of the following statements is CORRECT?

d. Scenario analysis is a computerized version of scenario analysis where input variables are selected based on their probability distributions.

18. Which of the following is an example of a timing option?

c. A company pays a higher cost today in order to be able to reconfigure the project

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