- CFA Exams
- CFA Level I Exam
- Study Session 7. Corporate Finance (1)
- Reading 19. Capital Budgeting
- Subject 3. Risk analysis of capital investments - stand-alone methods
CFA Practice Question
Sensitivity analysis is:
B. A risk analysis technique that considers both the sensitivity of NPV to changes in key variables and the likely range of variable values.
C. A risk analysis technique that considers the sensitivity of NPV to changes in key input variables.
D. The NPV when "bad" and "good" sets of financial circumstances are compared.
A. The NPV when sales and other input variables are set equal to their most likely values.
B. A risk analysis technique that considers both the sensitivity of NPV to changes in key variables and the likely range of variable values.
C. A risk analysis technique that considers the sensitivity of NPV to changes in key input variables.
D. The NPV when "bad" and "good" sets of financial circumstances are compared.
Correct Answer: C
Sensitivity analysis indicates how much the net present value of an investment project will change in response to changes in an input variable.
User Contributed Comments 1
| User | Comment |
|---|---|
| antarctica | b and d refer to scenario analysis |