In General There Are Two Primary Issues Involved in Risk

question 10

Multiple Choice

In general there are two primary issues involved in risk. What are these two issues?

• A) Validation of spreadsheet model and setting up for the simulation.
• B) Uncertainty of the outcome and magnitude of the potential loss.
• C) Maximum amount of profit made and the probability of a maximum profit.
• D) Maximum amount of loss incurred and the likelihood of that loss.

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Definitions:

Securities

Investment assets that denote a shareholding in a publicly-listed company (stock), a bondholder’s claim against a corporation or government, or ownership rights as outlined in an option contract.

Project Costs

Project Costs include all expenses incurred during the execution of a project, including materials, labor, and overhead.

Subjective Approach

A method based on personal opinions, interpretations, points of view, emotions and judgment.

Cost of Capital

The minimum return rate that a company needs to achieve on its investment initiatives to preserve its market valuation and draw in capital.