required rate of return. Based on your understanding of the concept of risk, complete the following statement: Risk is the possibility that actual earnings will be the forecasted earnings. 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. Which of the following ways of determining probabilities is considered to be relatively more accurate than the other? A subjectively-determined probability is considered to be relatively more accurate. An objectively-determined probability is considered to be relatively more accurate. Consider the following situation: Sheila tosses a coin and bets on the outcome of the toss based on the different probabilities of the occurrence of heads or tails. The probability distribution created for the possible outcomes of this situation is an example of: Objective probability Subjective probability