Question: Your company's management is interested in understanding how sensitivity analysis and Monte Carlo simulation can be used to access the stand-alone risk of a capital

 Your company's management is interested in understanding how sensitivity analysis and

Your company's management is interested in understanding how sensitivity analysis and Monte Carlo simulation can be used to access the stand-alone risk of a capital project. One of your company's financial analysts, Connor, makes the following statements: Statement 1: "Sensitivity analysis calculates the impact on the NPV of changes in several input variables at a time." Statement 2: "Monte Carlo simulation is a procedure for estimating a probability distribution of outcomes, such as for the NPV for a capital investment project." Are Connor's statements about sensitivity analysis and Monte Carlo simulation correct? A) es for Statement 1 and Statement 2 B) No for Statement 1 because sensitivity analysis calculates one input variable only at a time C) No for Statement 1 because sensitivity analysis estimates the inputs by using desired NPV D) No for Statement 2 because Monte Carlo does not produce a probability distribution of outcomes E) No for Statement 2 because the description is for scenario analysis

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