Unidimensional scenario analysis:
A. creates an array of portfolio gains/losses for all possible scenarios.
B. incorporates the correlation across multiple risk factors.
C. can easily handle multiple factors.
D. none of these answer choices are correct.
Answer:A
Unidimensional scenario analysis *uates the portfolio value for each scenario. The distinction between unidimensional and multidimensional is that the latter incorporates correlation across risk factors for each scenario. Unidimensional analysis quickly increases in computational burden as risk factors are added.