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Which of the following statements is correct? ...

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Finance

Which of the following statements is correct?

One advantage of sensitivity analysis relative to scenario analysis is that it explicitly takes into account the probability of specific effects occurring, whereas scenario analysis cannot account for probabilities.

Sensitivity analysis, as it is generally employed, is incomplete in that it fails to consider the range of likely values for the key input variables and the probabilities of different input values.

Scenario analysis is a good way to measure market risk because it explicitly considers diversification effects.

Scenario analysis is a statistically based behavioural approach to project analysis that applies predetermined probability distributions.

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