SENSITIVITY ANALYSIS Definition

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SENSITIVITY ANALYSIS is the analysis of how sensitive outcomes are to changes in the assumptions. The assumptions that deserve the most attention should depend largely on the dominant benefit and cost elements and the areas of greatest uncertainty of the program or process being analyzed.

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CURRENT COUPON is the the coupon for a recently issued bond that reflects the prevailing level of interest rates, with the result that the bond is priced at or close to par value.

BENEFIT STREAM is any level of income, cash flow, or earnings generated by an asset, group of assets, or business enterprise. When the term is used, it should be supplemented by a definition of exactly what it means in the given valuation context.

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