Which of the following statements about risk is (are) correct?
I. Risk is the possibility that the actual cash flows will be different from the expected cash flows.
II. Risk management is utilized by companies to provide a chance to make a quick profit.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Question

Which of the following statements about risk is (are) correct? 
I. Risk is the possibility that the actual cash flows will be different from the expected cash flows.
II. Risk management is utilized by companies to provide a chance to make a quick profit.
A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements I and II are correct.
D) Neither statement I nor II is correct.

Quizplus · Accepted Answer

Statement I is correct as risk refers to the uncertainty of actual cash flows differing from expected cash flows. Statement II is incorrect as risk management is utilized by companies to reduce or mitigate risk, not to provide a chance for quick profits.

Which of the Following Statements About Risk Is (Are) Correct