________ Is the Extent of an Asset's Risk

question 81

Multiple Choice

________ is the extent of an asset's risk. It is found by subtracting the pessimistic outcome from the optimistic outcome.

• A) Variance
• B) Standard deviation
• C) Probability distribution
• D) Range

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Definitions:

Net Present Value

The disparity between cash inflows' present value and cash outflows' present value through a certain time frame, utilized to determine an investment's profitability.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Cash Break-even Point

The point at which a business's cash inflows equal its cash outflows, excluding financing.

Degree of Operating Leverage

A ratio that quantifies the sensitivity of a company's operating income to its sales, demonstrating the impact of fixed and variable costs on profitability.