This lesson is free - just sign in to access it.
This lesson is a part of the course Statistical Concepts and Market Returns
Risk is the possibility that actual returns might differ, or vary, from expected returns. In fact, actual returns will most likely differ from expected returns. It is important for decision-makers to estimate the magnitude and likelihood of the difference between actual and estimated returns. After all, there is a big difference if your predictions result in an error of only $100 versus an error of $1 million.
