NISM Certifications · NISM-Series-XV: Research Analyst · Fundamentals of Research
An analyst's sales forecast for a company is Rs 2,000 crore in the base case. Under an optimistic scenario she assumes 10% higher sales, and under a pessimistic scenario 15% lower sales. What are the sales (Rs crore) in the optimistic and pessimistic scenarios respectively?
Optimistic sales are Rs 2,200 crore (2,000 increased by 10%) and pessimistic sales are Rs 1,700 crore (2,000 reduced by 15%). Both scenarios are measured against the base case of Rs 2,000 crore using simple percentage changes.
- A2,200 and 1,700Correct
- B2,200 and 1,850
- C2,150 and 1,700
- D2,100 and 1,800
Explanation
Optimistic: 2,000 x 1.10 = 2,200. Pessimistic: 2,000 x 0.85 = 1,700. The option with 1,850 wrongly applies 7.5% instead of 15%, and 2,150 wrongly uses 7.5% as the upside.
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