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

---

Definitions:

Optimistic Thinking

The practice of focusing on the positive aspects of situations or expectations of favorable outcomes.

Open-Mindedness

The willingness to consider new ideas, perspectives, and possibilities without prejudging them.

Personal Projects

Individual pursuits or tasks that a person considers significant and undertakes to achieve personal goals.

Well-Formulated Goals

Objectives that are clearly defined, measurable, attainable, relevant, and time-bound, facilitating achievement and progress tracking.