CIMA BA2 · Chapter 9 · Question 10 of 11
Which of the following is a limitation of SENSITIVITY ANALYSIS?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) It normally changes only one variable at a time, whereas in practice several variables may change together
Explanation
Sensitivity analysis measures how far a single estimate can change before the decision changes, which helps identify critical variables. Its main limitation is that it usually varies one factor at a time while holding others constant. It does not require probabilities, which is why it does not show how likely a change is.
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