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Which of the following is described by the definition given below? "It is the expected guaranteed value of taking a risk."
Correct Answer: A
Explanation/Reference: Explanation: The Certainty equivalent value is the expected guaranteed value of taking a risk. It is derived by the uncertainty of the situation and the potential value of the situation's outcome. Incorrect Answers: B: The risk premium is the difference between the larger expected value of the risk and the smaller certainty equivalent value. C, D: These are not valid answers.