Asked by mallika persaud on Jun 08, 2024

verifed

Verified

Which of the following is not a method for incorporating risk analysis into capital budgeting?

A) Positive/Negative analysis
B) Monte Carlo simulations
C) Scenario analysis
D) Sensitivity analysis
E) Decision tree models

Positive/Negative Analysis

An evaluative process that assesses the positive and negative outcomes or impacts of a decision or situation.

Risk Analysis

The process of identifying, assessing, and prioritizing risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events.

Capital Budgeting

The process by which businesses evaluate and prioritize investments in projects and acquisitions to maximize their long-term value.

  • Distinguish multiple approaches for embedding risk within capital budgeting decisions, including the application of Monte Carlo simulation.
verifed

Verified Answer

TE
Trevorlin ElderJun 08, 2024
Final Answer :
A
Explanation :
Positive/Negative analysis is not a commonly used method for incorporating risk analysis into capital budgeting. The other methods listed (Monte Carlo simulations, scenario analysis, sensitivity analysis, and decision tree models) are all widely used in risk analysis.