What are the benefits and Flaws of Payback Screening?

Q: What is sensitivity analysis? Explain.

A: Financial models refer to the summary or brief of a company's performance, on the basis of the…

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

A:

Q: What are the different variables in sensitivity analysis?

A: Answer: Under a given set of expectations, a sensitivity analysis describes the way different values…

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: What can be understood by abnormal return?

A: Note firstly we understand what is meaning of abnormal return. Basic meaning of abnormal return is…

Q: What is a scenario analysis? What is it designed to show, and how does it differ froma sensitivity…

A: Scenario analysis is the technique of analyzing the portfolio to find out the expected value of…

Q: What is performance testing and what are its bottlenecks?

A: It examines financial records, individual transactions, and the processes involved in obtaining and…

Q: What is the difference between best efforts and underwriting?

A: The term best efforts allude to a specialist organization's consent to take the necessary steps to…

Q: What is Non-Sampling Risk?

A: Sampling: It is a procedure used by the auditor to analyze the predetermined number of observations…

Q: is profile measurement and analysis? What are the limitations of this approach?

A:

Q: Explain the Sensitivity Analysis?

A: The sensitivity analysis is utilized to comprehend the impact of a lot of autonomous factors on some…

Q: What is the criticism for using SMB and HML as risk factors?

A: The Fama and French Three-Factor Model (or Fama French Model for short) is an asset pricing model…

Q: What are the Flaws of Payback Screening?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: Why is the additional risk not taken without expected additional return?

A: The risk-return tradeoff takes note of that the potential return increments with an expansion in…

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: What are some similarities between predictive policing and the social credit score? What are some…

A: Predictive policing: Predictive policing is mathematical based system, to analyze the data and to…

Q: How can you partically alleviate the various drawbacks of IRR?

A: Internal rate of return (IRR) is one of the capital budgeting techniques which is used to measure…

Q: How does the use of scenarios differ from sensitivity analysis?

A: Sensitivity analysis and scenario analysis are the assessment techniques that are used in investment…

Q: What are the advantages and disadvantages of using MUS? Under what conditions is it best used?

A:

Q: t is “inquiry” and “observation” procedures? Give the strengths and weaknesses of these tests?

A: This method is often used in conjunction with other, more reliable method. For example, an auditor…

Q: Differentiate between sensitivity analysis and scenario analysis.What advantage does scenario…

A: Differentiate between sensitivity analysis and scenario analysis: Scenario analysis involves…

Q: How does/can a financial intermediary reduce the risk facing them due to Adverse Selection?

A: The question is based on one of the key issue in financial market, banking industry,  about the…

Q: What should occur when a low level of Detection Risk is acceptable?

A: Detection risk is the risk that procedures performed to reduce audit risk will not detect a material…

Q: What do we mean by fundamental risk, and why may such risk allow behavioral biases to persist for…

A: Answer: Meaning: Fundamental risk is nothing but the loss arising out of situation which affects a…

Q: payback period, NPV, and IRR always lead to the same decision? Why or why not? If not, which one…

A: Step 1   One of the most essential choices a business owner or management will ever make is capital…

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: What are valid weaknesses of NPO?

A: Not for profit organization have certain weaknesses. some for them are- 1. Limited Purposes In order…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: Why is EBITDA controversial?

A: Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a metric used to assess…

Q: What is the iceberg effect? How can CASE tools help to minimize this phenomenon?

A: The Iceberg Principle or Iceberg Theory is a hypothesis that proposes that we can't see or recognize…

Q: What are some strengths and weaknesses of sensitivity analysis and scenario analysis?

A: Sensitivity Analysis determines how the dependent variable changes when the independent variable…

Q: What are the benefits and drawbacks of FIFO?

A: Introduction: First-in-First-Out:  In First-in-First-Out method, the costs of the initially…

Q: What is Roll’s critique of CAPM tests?

A: Capital asset pricing model is a model that is used to estimate the expected return on an asset. In…

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: costs and benefits of a too-big-to-fail

A: Too-Big-To-Fail Policy: Too-big-to-fail policy means saving a firm or industry whose failure can…

Q: Explain Prepayment Penalties?

A: Prepayment penalties are those penalties that lender charges from the borrower if borrower…

Q: What is sensitivity analysis and its functions?

A: The answer for the theory question on sensitivity analysis and its functions is discussed hereunder…

Q: What is the implication of the cost of the “wrong decision” in the selection process

A: Selection process refers to the process in which we choose an alternative from all the available…

Q: What advantage does scenario analysis have over sensitivityanalysis?

A: In finance, we are required to analyze the change in value of one variable over the change in the…

Q: What are practical weaknesses of NPO?

A: Organizations are described as business units which are established by the individuals, or group of…

Q: What is a goingconcern problem? What factors can contribute to such aproblem?

A: Given: To analyse about the going concern problem and its factors contribution as follows,

Q: What is a sensitivity analysis?

A: Sensitivity analysis:Sensitivity analysis ascertains the manner in which the different values of an…

Q: What is the definition of the phrase Sensitivity Analysis?

A: The Answer