Which of the following statements gives the best definition/description of the risk that is associated with an investment?
A)The total risk of an investment is the chance that it will earn a negative return.
B)The total risk of an investment is the chance that it will earn a positive return.
C)The total risk of an investment is the chance that it will earn a return other than the one that is expected.
D)The total risk of an investment is measured by its beta coefficient.
E)The total risk of an investment can be determined by computing its expected return.

Question

Quizplus · Accepted Answer

The total risk of an investment is the chance that it will earn a return other than the one that is expected. This includes both the possibility of earning a higher return than anticipated, as well as the possibility of earning a lower return or even losing money. It encompasses all types of risk associated with an investment, including market risk, credit risk, inflation risk, and interest rate risk. The other options do not provide a comprehensive definition of investment risk.

Which of the Following Statements Gives the Best Definition/description of the Risk