A tighter probability distribution shows the___________?
Correct answer: B. Lower risk
- A. Higher risk
- B. Lower risk
- C. Expected risk
- D. Peaked risk
Explanation
A tighter probability distribution means possible returns are clustered more closely around the expected return, indicating less dispersion and therefore lower risk. A wider distribution would indicate higher risk.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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