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In preparing a forecast of future financial performance, which of the following best describes sensitivity analysis and scenario analysis, respectively?Description #1 – A computer generated analysis based on developing probability distributions of key variables that are used to drive the potential outcomes.
Description #2 – The process of analyzing the impact of future events by considering multiple key variables.Description #3 – A technique whereby key financial variables are changed one at a time and a range of possible outcomes are observed. Also known as “what-if” analysis.
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