Risk Adjusted Value aka Expected Value means a Adjusting for

Risk Adjusted Value (aka Expected Value) means:

             (a) Adjusting for the risk attendant to a nominal value of an outcome for the uncertainty that such outcome will occur;

(b) Is equal to the Nominal Value of the outcome times (x) the Probability of that outcome;

            (c) Adjusts for risk profile;

            (d) “a” and “b”

               (e) None of the above.

Solution

(a) Adjusting for the risk attendant to a nominal value of an outcome for the uncertainty that such outcome will occur;

Whenever there are risks involved, risk averse investors will assign lower values that have more risks associated with them than to otherwise similar assets that are less risky.

i.e. for a higher risk they will reduce a nomial amount slightly higher from real value to compare with other non risky assets.