How is risk defined?
What will be an ideal response?
Risk means different things to different people, depending on the context and on how they feel about taking chances.
While certainly acknowledging these different kinds of risk, we limit our attention to the risk inherent in an
investment. In this context, risk is the potential variability in future cash flows. The wider the range of possible events
that can occur, the greater the risk.
You might also like to view...
For a profitable firm in the 30% marginal tax bracket with $100,000 of annual depreciation expense, the depreciation tax shield would be:
A) $30,000. B) $65,000. C) $35,000. D) $10,500.
People who believe they control the events that affect their lives are said to possess an internal locus of control
Indicate whether the statement is true or false.