The measure of risk that focuses on the worst possible outcome is called:
A) expected rate of return.
B) risk-free rate of return.
C) standard deviation of return.
D) value at risk.

Question

Quizplus · Accepted Answer

The value at risk measure focuses on the worst possible outcome, indicating the maximum expected loss that could occur for a specific level of confidence. The other options, such as expected rate of return, risk-free rate of return, and standard deviation of return focus on the average return or variability of returns, and do not necessarily capture the worst-case scenario. Therefore, the best choice is D, value at risk.

The Measure of Risk That Focuses on the Worst Possible