Which of the Following Statements Is Correct

Multiple Choice

Which of the following statements is correct?

A) Sensitivity analysis is a good way to measure market risk because it explicitly takes into account diversification effects.
B) One advantage of sensitivity analysis relative to scenario analysis is that it explicitly takes into account the probability of specific effects occurring, whereas scenario analysis cannot account for probabilities.
C) Simulation analysis is a computerized version of scenario analysis where input variables are selected randomly on the basis of their probability distributions.