In financial management, risk is referred to as:
A) the environmental factors that may affect a business adversely.
B) the internal factors that may disrupt the smooth functioning of a company.
C) the degree of uncertainty about the actual outcome of a decision.
D) the various strategies implemented by managers to increase returns.

Question

Quizplus · Accepted Answer

Risk in financial management refers to the degree of uncertainty about the actual outcome of a decision. It is the possibility that the actual outcome may differ from the expected outcome. Environmental factors and internal factors may contribute to the level of risk, but they are not the definition of risk itself. Similarly, implementing various strategies to increase returns may be a response to risk, but it is not the definition of risk.

In Financial Management, Risk Is Referred to As