hard20 pts · first answer countsrisk-managementrisk-appetite

When expected value is not enough

Option A has a slightly better EMV than option B but a 2% chance of a loss that would bankrupt the company. Option B has no such tail. What should a risk-aware board consider?

A.Whether the tail loss is beyond what the firm can surviveB.Only the EMV, since it already includes all outcomesC.Choosing A because its EMV is higherD.Ignoring the 2% chance as too small

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When expected value is not enough

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