Chapter 9, Risk and uncertainty and opportunity cost Flashcards
1
Q
Uncertainty
A
inability to calculate the costs of benefits of a decision precisely
2
Q
Risk
A
chance of error
3
Q
reward
A
the possible return
4
Q
Quantifiable risk
A
the likelihood of a predictable risk occurring. it is possible to put a value on this sort of risk
5
Q
Unquantifiable risk
A
the risk of an event that is unexpected. Sometimes referred to as ‘the unknown unknowns’ it is not possible to put value on this risk
6
Q
Opportunity Cost
A
the next best alternative that has to be forfeited when a decision is made
