The Presence of Risk Means That

question 61

Multiple Choice

The presence of risk means that

• A) investors will lose money.
• B) more than one outcome is possible.
• C) the standard deviation of the payoff is larger than its expected value.
• D) final wealth will be greater than initial wealth.
• E) terminal wealth will be less than initial wealth.

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Definitions:

Share

A unit of ownership interest in a corporation or financial asset, entitling the shareholder to a portion of the earnings and assets.

Salary

A fixed amount of money or compensation paid to an employee by an employer, typically on a regular basis, for performing their job.