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Definition of Risk in Business
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Definition of Risk in Business

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@ArdentGauss

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Questions and Answers

What does a 70% probability of loss at a supermarket signify?

  • No risk involved
  • High level of risk
  • Low level of risk (correct)
  • Certainty of loss

    • How does uncertainty differ from risk?

  • Uncertainty can be expressed numerically, risk cannot
  • Risk is about doubt, uncertainty is about probability
  • Uncertainty is subjective, risk is objective (correct)
  • Uncertainty is definite, risk is indefinite

    • If one person has a 90% chance to lose and another has a 10% chance to lose, both losing results in them losing:

  • $1,000,000 and $100,000 respectively
  • $900,000 and $100,000 respectively
  • $1,000,000 each
  • $500,000 each (correct)

    • Which characteristic makes risk different from uncertainty?

    <p>Measurable</p> Signup and view all the answers

    How would you describe the relationship between the amount of loss and the probability of an event occurring?

    <p>No relationship</p> Signup and view all the answers

    What is the formula for calculating objective risk?

    <p>Probable variation of actual loss / Probable average loss</p> Signup and view all the answers

    How does the text define risk in terms of deviations between actual and expected outcomes?

    <p>A standard deviation in statistics</p> Signup and view all the answers

    Based on the text, what happens to risk when the variation of outcomes decreases?

    <p>Risk decreases</p> Signup and view all the answers

    What is a characteristic of risk, according to the text?

    <p>At least one outcome must be undesired</p> Signup and view all the answers

    What does the text suggest about uncertainty being different for individuals?

    <p>Uncertainty is subjective and varies based on an individual's mindset</p> Signup and view all the answers

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