Risk is:A) Net income divided by average total assets.B) The reward for investment.C) The uncertainty about the return we will earn.D) Unrelated to return expected.E) Derived from the idea of getting something back from an investment.

Question

Heather Gingerich · Accepted Answer

Final Answer : C, Explanation :  Risk refers to the uncertainty surrounding the potential returns from an investment. It is the possibility that actual returns may differ from expected returns, which can result in losses. Therefore, option C is the correct definition of risk. Option A is the formula for return on assets, not risk. Option B refers to the return earned on an investment, not risk. Option D is incorrect since risk and return are usually related (higher risk accompanies the potential for higher returns), and option E only refers to the idea of obtaining something from an investment, not risk.

Risk is:

A) Net income divided by average total assets.
B) The reward for investment.
C) The uncertainty about the return we will earn.
D) Unrelated to return expected.
E) Derived from the idea of getting something back from an investment.

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