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What is risk? What two factors are important in determining the degree of risk? Both investing and gambling can be defined as undertaking risk in
- What is risk? What two factors are important in determining the degree of risk?
- Both investing and gambling can be defined as undertaking risk in order to earn a profit. Explain how these two activities are different and why society generally takes a more favorable view of investing compared to gambling.
- Explain the concept of correlation. If two securities have a high positive correlation, what does that mean? Give an example of two securities that might be highly correlated. If two securities have a low positive correlation, what does this mean? Give an example of two securities that might have a low positive correlation. If two securities are negatively correlated, what does that mean? Give an example of two securities that might be negatively correlated.
- What kind of risk do standard deviation and beta measure? Explain.
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