The form of risk analysis which examines the effect of various combinations of value drivers is known as
A) scenario analysis.
B) sensitivity analysis.
C) value driver analysis.
D) expected value analysis.

Question

Quizplus · Accepted Answer

Scenario analysis examines the effect of various combinations of value drivers, such as changes in interest rates, commodity prices, or exchange rates, on a company's financial performance. It helps to assess the impact of different scenarios on the company's cash flows, earnings, and valuation. Sensitivity analysis evaluates the sensitivity of a company's financial performance to changes in specific variables or assumptions, such as changes in sales volume, prices, or costs. Value driver analysis identifies and measures the key drivers of a company's performance, such as customer satisfaction, product quality, and innovation. Expected value analysis calculates the expected outcome for a particular decision or scenario based on various inputs and probabilities.

The Form of Risk Analysis Which Examines the Effect of Various