Which of the following is a correct definition of risk?
A)Risk is the probability that returns will be less than expected.
B)Risk is the variability of the probability distribution of returns.
C)Both of the above are correct.
D)Neither of the above is correct.

Question

Quizplus · Accepted Answer

Both options A and B define risk accurately. Option A focuses on the chance that an investment may not yield expected returns. Option B takes into consideration the range of outcomes or variations in potential returns that an investment has, meaning the more variability, the higher the risk. Therefore, both options should be taken into account when considering the risk of an investment.

Which of the Following Is a Correct Definition of Risk