a.
To match: The correct term for the definition in option (a).
a.

Explanation of Solution
Process of recalculating a project’s
Hence, the correct term for the definition in option (a) is scenario analysis.
b.
To match: The correct term for the definition in option (b).
b.

Explanation of Solution
Option to modify a project at a future date is called real option.
Hence, the correct term for the definition in option (b) is Real option.
c.
To match: The correct term for the definition in option (c).
c.

Explanation of Solution
Analysis of how project NPV changes if various norms are made about sales, costs, and other key variables is called sensitivity analysis.
Hence, the correct term for the definition in option (c) is sensitivity analysis.
d.
To match: The correct term for the definition in option (d).
d.

Explanation of Solution
The degree to which the fixed costs increase the effect of decrease in sales on company’s profits is called operating leverage.
Hence, the correct term for the definition in option (d) is operating leverage
e.
To match: The correct term for the definition in option (e).
e.

Explanation of Solution
Graphical approach for showing probable future events and the response to the future event is called decision tree.
Hence, the correct term for the definition in option (e) is decision tree.
f.
To match: The correct term for the definition in option (f).
f.

Explanation of Solution
Break even analysis helps in determining the level of sales at which the future sales will break even the cost of production.
Hence, the correct term for the definition in option (f) is Break even analysis.
Want to see more full solutions like this?
Chapter 10 Solutions
BARUCH FUND OF CORPORATE FIN. W/CONNECT
- Explain how an increase in interest rates by a central bank could affect bond prices and stock market performance. Explanation.arrow_forwardWhat is the purpose of diversification in an investment portfolio, and how does it reduce risk?arrow_forwardExplain how an increase in interest rates by a central bank could affect bond prices and stock market performance.arrow_forward
- What is the purpose of diversification in an investment portfolio, and how does it reduce risk? Need help!arrow_forwardWhat are the key differences between a company’s income statement and its cash flow statement? Why are both important for financial analysis? Need help!arrow_forwardWhat are the key differences between a company’s income statement and its cash flow statement? Why are both important for financial analysis?arrow_forward
- What is the relationship between risk and return in finance, and how is this reflected in the Capital Asset Pricing Model (CAPM)? Explain.arrow_forwardDefine the time value of money (TVM). How does TVM influence decision-making in capital budgeting? Explanation.arrow_forwardWhat is the relationship between risk and return in finance, and how is this reflected in the Capital Asset Pricing Model (CAPM)?arrow_forward
- 3. Explain the concept of compounding. How does compounding impact the future value of an investment? Need help!arrow_forward3. Explain the concept of compounding. How does compounding impact the future value of an investment?arrow_forwardWhat is the difference between a stock and a bond, and how do they function as investment options? Need help now !arrow_forward
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
- Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage LearningCorporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education





