The measure of risk is best described as a. the potential loss; b. the variability of outcomes around some expected value; c. the probability of expected values; d. the potential expected loss
Measurement of Risk
Risk entails the probability experience losses in the business due certain factors. Risk is part of any investment thus we cannot ignore the possible threates to a business. Incorporation of risk in the business entails use of various methods to evaluate the magnitude of the risk associated with the intended project. Possible methods to use include : use of expected monetary value , standard deviation or coefficient of variation.
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from CFP Certification Exam Study Guide - Certified Financial PlannerChapter 8 / Lesson 1
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