The greater the uncertainty associated with the ________, the greater the probab

Question

1. The greater the uncertainty associated with the ________, the greater the probability that actual returns will differ from the _________.
   1. expected return; expected value;
   2. expected value; expected return;
   3. expenditure; revenue;
   4. All of the above.

1. The following is/are (an) example(s) of uncertainty(ies):
   1. war or peace;
   2. inflation and unemployment;
   3. prosperity or recession;
   4. All of the above are examples.

1. Uncertainty can be treated explicitly in the financial planning process by:
   1. stipulating a range of likely outcomes;
   2. varying the stipulations over a range of likely outcomes;
   3. observing the changes that occur in expected benefits as the assumptions are altered;
   4. All of the above.

Explanation / Answer

1) 1. expected return; expected value;

2) 4. All of the above are examples.

3) 2. varying the stipulations over a range of likely outcomes

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