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What is a sensitivity analysis in a valuation model?

  1. A Showing how the output changes across ranges of key assumptions
  2. B Testing the model for errors
  3. C Comparing with competitors
  4. D Adjusting for inflation
Answer

Showing how the output changes across ranges of key assumptions

A single point estimate conveys false precision. Presenting a football field of ranges across methodologies is standard banking practice.

All Investment Banking MCQs

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