Which of the following statements gives the best definition/description of the risk that is associated with...

Which of the following statements gives the best definition/description of the risk that is associated with an investment?

The total risk of an investment is the chance that it will earn a negative return.

The total risk of an investment is the chance that it will earn a positive return.

The total risk of an investment is the chance that it will earn a return other than the one that is expected.

The total risk of an investment is measured by its beta coefficient

Expert Solution

Answer is Statement C

Risk, in terms of financial world, is the chance that actual return on investment will be different than expected. Risk implies that you have a chance of losing some, or even all, of your original principle investment.

With lower level of return, there is lower risk associated with the investment and vice-versa.

jeff jeffy answered 3 years ago

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