Which of the following is described by the definition given below?

Which of the following is described by the definition given below?

"It is the expected guaranteed value of taking a risk."
A . Certainty equivalent value
B . Risk premium
C . Risk value guarantee
D . Certain value assurance

View Answer

Answer: A

Explanation:

The Certainty equivalent value is the expected guaranteed value of taking a risk. It is derived by the uncertainty of the situation and the potential value of the situation’s outcome.

Incorrect Answers:

B: The risk premium is the difference between the larger expected value of the risk and the smaller certainty equivalent value.

C, D: These are not valid answers.