Understand how more variance in potential outcomes means that an investment, action, or decision is associated with more risk.
- What is risk?…One way to think about risk is as the uncertainty…about what will happen in the future.…From the standpoint of statistics,…we can think of risk as the variability…in potential future payoffs from some decision,…from making an investment, hiring a key person,…or launching a new product.…For example, consider two potential real estate investments.…Real estate investment number one,…an office building in the central business district.…This is a stable area which has been…the heart of the business district for 30 years.…
Real estate investment number two,…undeveloped piece of land…in an unfinished industrial park on the edge of town.…In this context, unfinished means it's empty land…full of weeds, and mud,…and a few wooden surveyor stakes in the ground…indicating where the roads, the sewer lines,…and the power lines are going to be in the future, maybe.…Which of these two possible real estate investments…is associated with more risk?…In other words, for which of the two is there a chance…that you make a lot of money,…
Jim Stice
Earl Kay Stice
Released
8/1/2017In this course, join accounting professors Jim and Kay Stice as they help you discover how to leverage the power of numbers to approach businesses problems and make everyday decisions. They explore the power of ratios and percentages, how to monitor and evaluate your budget, how to forecast the timing and amount of a business loan, and much more.
- The power of ratios and percentages
- Growth rates, rule of 72, and extrapolation
- Financial ratios to determine unpaid inventory
- How to convert to percentages
- Variance and the concept of risk
- Numerical planning and everyday decisions
- Creating, monitoring, and evaluating your budget
- Forecasting the timing and amount of a business loan
- The power of compound interest
- Loan payments and interest rates
Skill Level Beginner
Duration
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Introduction
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Welcome1m 44s
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1. The Power of Ratios and Percentages
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2. Applied Probability and Statistics
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How averages explain events6m 29s
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3. Numerical Planning and Measurement
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4. Interest: Paying and Earning
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5. The Art of Numerical Estimation
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Conclusion
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Video: Variance and the concept of risk