Review Questions Chapter 2: MEASURING RISK 1. Frequency and Severity are very common measures of risk. Briefly define each. B. Does probability refer to the frequency or the serity? 2. The book uses 4 synonyms for the average of the outcome if you played a game over and over. The four synonyms are? 3. Common measures of risk vary from simple to complex, but all measure the variation for each outcome in an uncertain (risky) situation. Define Range. B. What does a low range or high range mean to a manager managing the risk of that occurrence? 4. What is the value at Risk (VaR)? Who created this risk measurement and in what year? Whom is this risk measurement mainly used by? 5. What are the 3 different methods to compute the VaR and briefly give an advantage and disadvantage to each method. 6. What is the equivalent of the VaR in the context of pure risk exposures? Which field is more likely to use this equivalent measure