Examine the Following List of "Risks

question 10

Multiple Choice

Examine the following list of "risks." Determine which of these are "pure risks."
I. The risk that your antique Corvette will depreciate in market value
II. The risk that you will have a collision in your Corvette, thus causing you to spend thousands of dollars in repair costs
III. The risk that someone will steal your Corvette
IV. The risk that you will buy a house and lightning will strike your roof, thus causing you to have to purchase a new roof
V. The risk that you will invest your life savings in a business venture that fails, thus causing you to lose your entire investment

• A) I, II, III, IV, and V
• B) I, II, and IV
• C) I, II, III, and IV
• D) II, III, and IV

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Definitions:

Foreign Exchange Transactions

Trades between two parties to exchange one currency for another, determining the relative value of different currencies.

Largest Stock Market

Typically refers to the New York Stock Exchange (NYSE) or the NASDAQ, both of which are among the largest and most influential stock markets globally.

Expected Return

The average amount of profit or loss one can anticipate on an investment, accounting for the probabilities of varying outcomes.

Standard Deviation

A statistic that measures the dispersion of dataset relative to its mean and is calculated as the square root of the variance.