Chapter 1 - RISK IN OUR SOCIETY 2004

Chapter 1 - RISK IN OUR SOCIETY 2004 - RISK IN OUR SOCIETY...

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Unformatted text preview: RISK IN OUR SOCIETY Chapter 1 What is risk? Uncertainty as to a loss Note: If the probability of a loss occurring is 0 or 1, then there is no risk. Rather there is an absolute certainty. What are the consequences of risk? (I) Risk aversion Slowing or a contraction in the economy Investors take a wait and see attitude in times of uncertainty I am more interested in the return of my money than in the return on my money. Mark Twain What are the consequences of risk? (II) Rising costs of products and services Step ladder Doctors visit Limits business investment in order to maintain cash balances May limit services to the public Lets summarize. What is risk? It may refer to: Uncertainty Doubt Chance of loss Object of insurance Objective Probability The long-run chance or frequency of an occurrence (# of occurrences/# of events) Examples: Coin toss Drawing an ace from a deck of cards Methods of Determining...
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This note was uploaded on 03/27/2012 for the course ACC 101 taught by Professor Smith during the Spring '12 term at Missouri State University-Springfield.

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Chapter 1 - RISK IN OUR SOCIETY 2004 - RISK IN OUR SOCIETY...

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