Economic risk:

Question

Economic risk:

Quizplus · Accepted Answer

Economic risk refers to the uncertainty surrounding the outcomes of managerial decisions, where all possible outcomes and their associated probabilities are not known. This lack of knowledge creates the potential for losses, making economic risk a major concern for managers. Additionally, economic risk cannot be directly reflected in the basic valuation model of the firm, further highlighting its unpredictable nature. Economic risk refers to the uncertainty of outcomes because all possible scenarios and their associated probabilities are not known. This can make it difficult for managers to make informed decisions and can increase the likelihood of loss. It cannot be directly reflected in the basic valuation model of the firm, as that model relies on known and predictable factors.

Economic Risk