In General There Are Two Primary Issues Involved in Risk

question 10

Multiple Choice

In general there are two primary issues involved in risk. What are these two issues?

• A) Validation of spreadsheet model and setting up for the simulation.
• B) Uncertainty of the outcome and magnitude of the potential loss.
• C) Maximum amount of profit made and the probability of a maximum profit.
• D) Maximum amount of loss incurred and the likelihood of that loss.

---

Definitions:

Bond Premium

A bond premium occurs when a bond sells for more than its face value, typically because its interest rate is higher than current market rates.

Cash Interest Paid

The actual amount of interest in cash that a company pays on its borrowings during a specific period.

Effective Yield

A measure of the return on an investment taking into account the effect of compounding interest, more accurate than simple yield calculations.

Present Value Factors

Multipliers used in calculating the present value of a future amount of money or stream of cash flows given a specified rate of return or discount rate.