One of the fundamental concepts in finance involves understanding the relationship between risk and return. The greater the risk, the greater the required rate of return. Based on your understanding of the concept of risk, complete the following statement: Risk is the possibility that actual future cash flows will not be the same as the cash flows expected. This implies that risk represents the of returns. Risk has an impact on outcomes. The likelihood that a particular outcome will occur in the future is called probability. When the possibilities of different outcomes are represented in a percentage form, the representation is referred to as a probability distribution. There are objective and subjective ways of determining probabilities. If a probability is determined using judgments and opinions of an individual or a group of individuals, it will be referred to as determination. Consider the following situation: Paul wants to bet on his favorite football team and determines that the team has an 80% probability of victory. The probability distribution created for the possible outcomes of this situation is an example of: Subjective probability Objective probability