| 释义 |
EncyclopediaSeeCertaintycertainty equivalent
Certainty equivalentAn amount that would be accepted today (risk free) in lieu of a chance to receive a possibly higher, but uncertain, amount.Certainty EquivalentA small, zero-risk return an investor may trade for a larger potential return with an associated risk. Companies offer certainty equivalent returns on certain investments and use their demand to determine the level of risk an investor will accept for a given return from the company.certainty equivalent The minimum sum of money a person would accept to forgo the opportunity to participate in an event for which the outcome, and therefore his or her receipt of a reward, is uncertain. For example, suppose you are told to draw one card from a full deck of cards. If you draw a red card you win $100 and if you draw a black card you win nothing. If you would accept $40 to forgo the selection and possibility of winning, $40 is the certainty equivalent of the outcome of the event. Certainty equivalents are used in evaluating risk.certainty equivalent see DECISION TREE. |