10 Questions
Sensitivity Analysis is a tool used in financial modeling to analyze how the different values of a set of independent variables affect a specific dependent variable under certain specific conditions. In general, sensitivity analysis is used in a wide range of fields, ranging from biology and geography to economics and engineering. It is especially useful in the study and analysis of a “______ Box Process” where the output is an opaque function of several inputs.
Black
Sensitivity Analysis is a tool used in financial modeling to analyze how the different values of a set of independent variables affect a specific dependent variable under certain specific conditions. In general, sensitivity analysis is used in a wide range of fields, ranging from biology and geography to economics and engineering. It is especially useful in the study and analysis of a “Black Box Process” where the output is an ______ function of several inputs.
opaque
An opaque function or process is one which, for some reason, can’t be studied and analyzed ______
easily
A Financial Sensitivity Analysis, also known as a What-If analysis or a What-If simulation exercise, is most commonly used by financial analysts to predict the outcome of a specific action when performed under certain conditions. Financial Sensitivity Analysis is done within defined boundaries that are determined by the set of independent (input) variables. For example, sensitivity analysis can be ______.
used
Sensitivity Analysis is a tool used in financial modeling to analyze how the different values of a set of independent variables affect a specific dependent variable under certain specific conditions. In general, sensitivity analysis is used in a wide range of fields, ranging from biology and geography to economics and engineering. It is especially useful in the study and analysis of a “Black Box Process” where the ______ is an opaque function of several inputs.
output
Sensitivity Analysis is only used in financial modeling
False
Sensitivity Analysis can be applied in fields such as biology and geography
True
An opaque function is one that can be easily studied and analyzed
False
Financial Sensitivity Analysis is also known as a What-If analysis
True
What-If analysis is used to predict the outcome of a specific action under certain conditions
True
Study Notes
Sensitivity Analysis
- Used in financial modeling to analyze how different values of independent variables affect a dependent variable under specific conditions
- Widely used in fields including biology, geography, economics, and engineering
- Especially useful for analyzing "Black Box Processes" where the output is an opaque function of several inputs
- An opaque function or process is one that cannot be studied or analyzed due to various reasons
What-If Analysis
- Also known as Financial Sensitivity Analysis or What-If simulation
- Used by financial analysts to predict outcomes of specific actions under certain conditions
- Done within defined boundaries determined by independent (input) variables
- Helps analyze how different values of independent variables affect a dependent variable
Test your knowledge of sensitivity analysis with this quiz. Explore how independent variables impact dependent variables and learn how this tool is used in various fields, from finance to biology and engineering.
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