Which of the Following Statements Regarding Risk Measures Is INCORRECT

question 1

Multiple Choice

Which of the following statements regarding risk measures is INCORRECT?

• A) A risk measure is a positive real valued function that quantifies the "risk" to changes in a firm's equity capital-losses-over some time period.
• B) Examples of risk measures include the maximum loss,the expected loss,and the value-at-risk.
• C) Artzner,Delbaen,Eber,and Heath (1999)identified four different properties or axioms that a good risk measure should satisfy.
• D) A risk measure satisfying Artzner,Delbaen,Eber,and Heath (1999)four axioms is called a coherent risk measure.
• E) Value-at-risk is the best risk measure because it satisfies all four properties above.

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Definitions:

Dividends Declared

The amount of earnings a company decides to distribute to its shareholders as measured at a specific point in time.

Retained Earnings

The portion of net income that is held back by a company to be reinvested in its operations or to pay down debt, rather than being distributed to shareholders as dividends.

Business Managers

Individuals responsible for overseeing the operational, financial, and strategic management of a company or a specific department.

Operating Activity

Financial activities directly related to the core business operations, including cash flows from selling goods and services.