QUESTION 16

What evaluates the NPV of a project with respect to changes in one variable while holding others constant.

Sensitivity analysis

Scenario analysis

Simulation

Mean Variance model

QUESTION 17

The present value (PV) break-even point is better than the accounting break-even point because

PV break-even point is the same as the sensitivity analysis.

PV break-even point covers the economic opportunity costs of the investment.

PV break-even point covers the fixed costs of production, which the accounting break-point does not.

PV break-even point covers the variable costs of production, which the accounting break-even point does not.

QUESTION 18

An investor who wishes to form a portfolio that lies to the right of the optimal risky portfolio on the Capital Market Line has to

lend some of her money at the risk-free rate and invest the rest in the optimal risky portfolio.

borrow some money at the risk-free rate and invest it in the optimal risky portfolio

invest only in the risky securities.

hold a portfolio which is not diversified.