Uncertainty – lack of information
Every item in a budget or a profit and loss account represents in reality a probability distribution.
Every item in a budget or a profit and loss account represents in reality a probability distribution.
It is first when the decision involves consequences for the decision maker he faces a situation of risk ..
The risk is best expressed by using a graph illustrating the probability curve. The slope tells us about the uncertainty involved, the steeper the curve the less uncertainty involved.
All businesses need the ability to, if not predict the future; assess what its future economic performance can be …
Whenever the outcome of a situation is not perfectly certain you have uncertainty or risk.
Having arrived at the probability distribution for the value of equity, we are able to calculate expected gain, loss and their probability when investing in a company …