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
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.
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