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TERM 1 Risks must be ___ to determime if resources should be committed for a particular endeavor DEFINITION 1 quantified TERM 2 _____ provides a framework for assessing opportunities for profit and the threats of loss DEFINITION 2 Risk management TERM 3 to manage future risks under uncertainty, a ____ is required DEFINITION 3 model TERM 4 two different meanings of probability DEFINITION 4
- probability as a degreee of belief about whether an event will occur and how firmly this belief is held2. probability as a relative frequency of occurrence in repeated trials TERM 5 the most important measures when addressing potential risks are associated with ___ and ____ of losses during a specified period of time DEFINITION 5 frequency, severity
TERM 6 fair value is calculated by DEFINITION 6 multiplying each probability by its respective gain or loss; aka mean value or average value TERM 7 ____ is the deviation from the expected value DEFINITION 7 risk TERM 8 _____, _______, and _____ are appropriate measures of risk when interest is focused on solvency DEFINITION 8 Range, VaR, MPAL maximum probable annual loss TERM 9 _______, _______, and ______ are useful when looking at average deviations from what is expected for the purpose of planning for expected deviations from expected results DEFINITION 9 variance, standard deviation, and semi-variance TERM 10 _____ is useful when assessing systemic financial risk or the additional risk involved in adding an asset to an already existing diversified portfolio DEFINITION 10 CAPM Capital Asset Pricing Model
