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Risk means, in today's language, the probability of something bad happening or an unfortunate outcome. Risk in finance, however, is defined as the variance of

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Risk means, in today's language, the probability of something bad happening or an unfortunate outcome. Risk in finance, however, is defined as the variance of the probability distribution of retums. a. Why do these definitions seem contradictory? b. Reconcile the two ideas. 1 i B I EE % 3

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