Which of the following best describes investment risk? A. The probability of ach

Question

Which of the following best describes investment risk? A. The probability of achieving an improbable event B. the possibility of making a profit C. The potential variability in future cash flows D. The chance that a security will materialize Which of the following best describes investment risk? A. The probability of achieving an improbable event B. the possibility of making a profit C. The potential variability in future cash flows D. The chance that a security will materialize A. The probability of achieving an improbable event B. the possibility of making a profit C. The potential variability in future cash flows D. The chance that a security will materialize

Explanation / Answer

Investment risk is the risk that the actual return might be different than the expected return. Actual return may be different if there is a change in the future cash flows.
Therefore, the best statement that describes investment risk is - The potential variability in future cash flows.

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