risk

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Related to Relative risk: absolute risk, Attributable risk

Risk

Often defined as the standard deviation of the return on total investment. Degree of uncertainty of return on an asset. In context of asset pricing theory. See: Systematic risk.

Risk

The uncertainty associated with any investment. That is, risk is the possibility that the actual return on an investment will be different from its expected return. A vitally important concept in finance is the idea that an investment that carries a higher risk has the potential of a higher return. For example, a zero-risk investment, such as a U.S. Treasury security, has a low rate of return, while a stock in a start-up has the potential to make an investor very wealthy, but also the potential to lose one's entire investment. Certain types of risk are easier to quantify than others. To the extent that risk is quantifiable, it is generally calculated as the standard deviation on an investment's average return.

risk

The variability of returns from an investment. The greater the variability (in dividend fluctuation or security price, for example), the greater the risk. Because investors are generally averse to risk, investments with greater inherent risk must promise higher expected yields.

Risk.

Risk is the possibility you'll lose money if an investment you make provides a disappointing return. All investments carry a certain level of risk, since investment return is not guaranteed.

According to modern investment theory, the greater the risk you take in making an investment, the greater your return has the potential to be if the investment succeeds.

For example, investing in a startup company carries substantial risk, since there is no guarantee that it will be profitable. But if it is, you're in a position to realize a greater gain than if you had invested a similar amount in an already established company.

As a rule of thumb, if you are unwilling to take at least some investment risk, you are likely to limit your investment return.

risk

see UNCERTAINTY AND RISK.

risk

Uncertainty regarding the possibility of loss.

References in periodicals archive ?
While the relative risk reduction for first primary endpoint events was 6.
For leukemia in children below 5 years of age the relative risk of 1.
For women of the same age, the relative risk for admission was 1.
Nevertheless, there seemed to be an inverse relation between the degree of homocysteine reduction and the relative risk of stroke, with a significant reduction in the relative risk of stroke occurring once a 20% decrease in homocysteine concentration had been reached.
Meyer and Meyer explain that the coefficients of absolute and relative risk aversion developed by Pratt (1964) and Arrow (1965) were originally based on this specific concept of wealth, but because W is difficult to measure in practice, most subsequent analyses have used other forms of wealth or nonwealth variables as arguments of the decision maker's utility function.
Many who dismiss abortion as a serious risk for breast cancer will rant on about more politically unfashionable factors--second-hand smoke, red meat, obesity, microwaves, mercury--with the same low relative risks.
To make an informed decision, a discussion of individual risk versus relative risk is salient.
The scientists report that in studies with matched controls, pregnancies after assisted conception had a relative risk of 3.
It had been agreed that the action could only proceed if the relative risk was proved to be greater than 2.
In a study using data from the Nurses' Health Study of over 72,000 postmenopausal women aged 34 to 77, women in the highest quintile of total vitamin A intake had the highest relative risk of hip fracture.