Which of the Following Most Closely Defines the Term Risk

question 41

Multiple Choice

Which of the following most closely defines the term risk in finance?

• A) Knowing that you will lose money on an investment
• B) A decision in which the potential outcomes are known with certainty
• C) A measure of the variability of cash flows
• D) A situation in which the required return on an asset equals its expected return
• E) A measure of the magnitude of cash flows

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Definitions:

Cliffs

Steep rock faces, often along coastlines or riverbanks, formed by erosion and tectonic activities.

Elevation

The altitude of a place above sea level or ground level.

Geologic Cross Section

A two-dimensional diagram representing a slice through Earth that depicts the subsurface geometry of rock units and geologic structures.

Surface

The outermost or uppermost layer of an object or area.