A random variable:
A) is a variable whose future value is known with certainty
B) can be given a probability of occurrence by the risk manager
C) is completely outside the control of the risk manager
D) is not measurable

Question

Quizplus · Accepted Answer

A random variable is a variable whose future values are uncertain and depend on some probability distribution. It cannot be known with certainty. The probability of occurrence of a random variable can be assessed by the risk manager, which makes option B the correct choice. Option C is not always true, as there may be some ways in which the risk manager can influence or control a random variable. Option A is incorrect, as we have just discussed, and Option D is also incorrect as random variables are measurable using statistical tools.

A Random Variable