For each of the following actions, identify whether the method of risk assessment motivating the action is due to the value at risk or the standard deviation of an underlying probability distribution. A. You buy life insurance (Standard Deviation / Value At risk)B. You hire an investment advisor who specializes in international diversification in stock portfolios. ((Standard Deviation / Value At risk)C. In your role as a central banker, you provide emergency loans to illiquid intermediaries. ((Standard Deviation / Value At risk)D. You open a kiosk at the mall selling ice cream and hot chocolate. (Standard Deviation / Value At risk)

Value at Risk is used to measure just how much is expected to be lost resulting from an investment over a period of time.

Standard Deviation is used to measure the risk of volatility in the returns of investments. It can measure idiosyncratic risk which is the risk inherent in an investment.

A. You buy life insurance. Value At risk.

Insurance has to do with Value at Risk to measure how much would have to be paid out.

B. You hire an investment advisor who specializes in international diversification in stock portfolios. Standard Deviation.

Diversification is based on the risk of stock volatility and is done to reduce idiosyncratic risk so this has to do with Standard deviation.

C. In your role as a central banker, you provide emergency loans to illiquid intermediaries. Value At Risk.

These illiquid intermediaries might be unable to pay back so the assessment needs to find out how much could potentially be lost.

D. You open a kiosk at the mall selling ice cream and hot chocolate. Standard Deviation.

These products will be sold in alternating seasons to ensure profitability is maintained. The idiosyncratic risk of selling only one of these was therefore targeted making this an example of Standard Deviation based risk assessment.

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know