How is sensitivity analysis used to cope with uncertainty in decision making?

Q: Distinguish between quantitative and qualitative factors in decision making.

A: Qualitative Factor:Qualitative factors are those factors which cannot be expressed in the financial…

Q: How do you figure out the balance of control and substantive testing? How does this link into…

A: Substantive testing can be defined as the process of auditing financial statements and obtaining…

Q: What are risk assessments?

A: Risk assessment means identification of risk faced by a business organization that hampers it from…

Q: How does the decision-maker use the scenario analysis?

A: Scenario analysis helps investors and analysts in making better decisions.

Q: Why is the variance (or standard deviation) used as a measure of risk? What are the advantages and…

A: Reasons of utilizing variance as a risk measure: While consider a lesser risk in investment, fewer…

Q: What detail would a decision maker require to analyse a dilemma with the expected value? What…

A: Settling on choices is surely the main undertaking of an administrator and it is regularly an…

Q: Why do we need stress testing and scenario analysis?

A: A stress test or scenario analysis is used to determine and analysis the outcome of a financial…

Q: What are Required Assumptions and Decision Frameworks for replacement analysis?

A: Replacement analysis:   It is an analysis tool in capital budgeting decisions. An asset life tends…

Q: analysis needed

A: Risk Analysis is a process that helps you identify and manage potential problems that could…

Q: What techniques can be used to analyze real options?

A: A choice accessible to the organization's managers related to the investment opportunities is known…

Q: What types of information must be considered when it comes to risk and return?

A: Risk and return go hand in hand both are related to each other.There is direct correlation between…

Q: In scanning environment, why the strategic auditor focuses more on external environment rather than…

A: Environmental scanning refers to the possession and utilization of knowledge regarding different…

Q: What are the two primary factors that are difficult to estimate in sensitivity analysis?

A: Answer: Sensitivity analysis is commonly used in determining the interactions in a system or even a…

Q: What role does MAD play in evaluating a forecasting model?

A: MAD refers to mean absolute deviation. It is also known as average absolute deviation which is the…

Q: What is the risk of assessing Control Risk too low?

A: Definition:   Tests of controls: Tests of controls form the part of audit procedures to be…

Q: List the common biases and errors in decision-making. Provide suggestions for how to avoid falling…

A: There are many errors and biases inn decision making such as.1.Overconfidence Bias2.Anchoring…

Q: Define control risk and detection risk. What is the difference between control risk and detection…

A: Auditing:   In auditing, auditors verify the correctness and fair presentation of financial…

Q: What happens when Control Risk is assessed to be at the maximum level?

A: Control risk Control Risk refers to the type of audit risk which evaluates the misstatement of…

Q: Briefly explain the decision-makers emphasis and the decision-models emphasis of decision usefulness…

A: Accounting is the process of recording, analyzing, summarizing, and interpreting the financial…

Q: Describe the relationship between Simulation analysis, Scenario analysis and Sensitivity analysis –…

A: Sensitivity Analysis refers to an assessment of the impact of the changes in one variable on the NPV…

Q: Explain the specific relationship between risk and reward and why this relationship must be true.

A: Risk refers to probability for loss of investment value by an investor whereas Reward refers to…

Q: Should standards be used to identify whom to blame for problems?

A: Standards are set to identify whether the actual activity is performed efficiently. The variances…

Q: What are some suggestions for risk management, typical response tactics, and IT system recovery…

A: Risk management:  A system of people, processes, and technology called risk management helps a…

Q: How can you tell the difference between planning and control decisions

A: The difference between planning and control decisions will be shown:

Q: What is objective risk

A: Risk means the possibility of happening loss. Risk is directly related to the loss. If the amount of…

Q: Should standards be used to identify who to blame for problems?

A: Standards are set to identify whether the actual activity is performed efficiently. The variances…

Q: How does the reward system for a strategic-based system differ from the traditional approach?

A: Strategic-based performance management system: A strategic-based performance management system turns…

Q: Explain the concept of contribution, its limiting factors and how it can effectively be used in…

A: INTRODUCTION: Decision-making is the process or act of determining anything using logic, intuition,…

Q: Distinguish planning decisions from control decisions?

A: Decision Making: Management of the business has to make good decisions for the growth and success of…

Q: Conduct proper hypothesis testing?

A: Hypothesis testing is also called as statistical tests. The test which is conducted to make…

Q: When we work with the breakeven point, how important is it to understand what a decision variable…

A: The question is related to Marginal Costing. The break-even point is that level of sales at which…

Q: What is the relationship between Evidence and Detection Risk?

A: Detection risk is the risk that an auditor will not find a material misstatement in a client's…

Q: Why is it important to be able to quantify risk?

A: Risk is the chance that an outcome of an investment's actual gain will differ from an expected…

Q: What is the risk of assessing Control Risk too high?

A: Control risk refers to the probability of financial statements that were considered wrongly stated…

Q: At which step or steps in the decision-making process do qualitative considerations generally have…

A: a. Specifying the criterion and identifying the alternatives. b. Developing a decision…

Q: isk with practical example

A: Political risk Political risk is the risk an investment's returns could suffer as a result of…

Q: describe presentation choices, including non-GAAP measures, that could be used to infl uence an…

A: There is very nothing new during this reading, simply a review of the previous material. heaps of…

Q: How will management know if one of the hypotheses underlying the balanced scorecard is false?

A: The best way to sort out if the speculation is valid or bogus is by trying it. All the speculation…

Q: For any given distribution of outcomes and probabilities, describe how preferences over risk affect…

A: An outcome is a potential result of an experiment in probability theory. The likelihood of an event…