SIE Exam Question 766: Answer and Explanation

Question: 766

Investment risk is defined as which of the following?

• A. The chance that an investment's actual return will be greater or less than its expected return.
• B. The chance that an investment's actual return will equal its expected return.
• C. The chance that an investment's actual return will be less than its expected return.
• D. None of the above are correct.

Correct Answer: C

Explanation:

Investment risk is the chance that an investment's actual return will be less than its expected return.