What is the importance of sensitivity analysis in decision-making?
Sensitivity analysis helps identify how different variables impact outcomes, aiding in better decision-making.
Can you give me an example of how it's used in finance?
Sure! In finance, sensitivity analysis can assess how changes in interest rates affect investment returns.
What are the key benefits of performing sensitivity analysis?
Key benefits include improved risk assessment, better resource allocation, and enhanced strategic planning.
Are there any limitations to sensitivity analysis?
Yes, limitations include oversimplification of models and the assumption of linear relationships between variables.
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