Which statement best describes the concept of risk?
A) Risk describes a situation where there is not just one possible outcome, but an array of potential returns.
B) Under risk situations there can only be one possible outcome, but with array of potential returns.
C) Under uncertain situations, future outcomes can be expected to have only one value.
D) Under a situation of risk, future outcomes can be expected to have only one value.

Question

Quizplus · Accepted Answer

Risk refers to situations where there is more than one possible outcome, each with a different probability of occurring. This means there is an array of potential returns, which could be positive or negative. Option B is incorrect because it contradicts the definition of risk by describing a single outcome. Option C is incorrect because uncertainty means the future outcomes cannot be accurately predicted, whereas risk involves assessing probabilities and potential outcomes. Option D is also incorrect because it suggests there is only one possible outcome, which is not true under a situation of risk.

Which Statement Best Describes the Concept of Risk