risk

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Related to Risk Seeking: Risk neutral, Risk Lovers

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 ?
More specifically, they become less risk averse or even risk seeking over losses.
Lottery Effect: An individual switches from being risk averse to risk seeking when she face low probabilities of winning very large payoffs.
2006) stress that under prospect theory individuals are predicted to be risk seeking in the face of potential loss, but risk averse when dealing with potential gains--they are conservative because of a concern that gains already attained might be lost.
The investment team, led by Luke Ellis, chief investment officer of Man's Multi-Manager division, will actively allocate to the strategies and group them into three core portfolio components - equity long/short strategies (50-80 per cent), risk seeking strategies (10-35 per cent) and diversifying strategies (5-25 per cent) - "with risk capital judiciously allocated between them.
They are risk-averse in the domain of gains while they are risk seeking in the domain of losses.
However, Prospect Theory predicts individuals faced with a prospective loss will respond with risk seeking behavior.
to the institutional colloquy of scholars, artists, and peers is to risk seeking a canonical recuperation that inverts the analysand's own tropisms.
Summary: The market remained in risk seeking territory, which weighed on the USD and JPY.
Whether or not someone exhibits risk aversion or risk seeking depends both on the situation and the individual (e.
For example, contrary to popular insurance for earthquakes--a vivid and dreaded, but low likelihood event --the higher likelihood, but more familiar crop loss evokes enough risk seeking behaviour to render insurance programs unsustainable.
Dr Joy Bringer, sports psychologist at the Sports Council for Wales has pulled together the original research, published by the Physician and Sports Medicine Journal, to draw up personality profiles, looking at six key areas - sociability, spontaneity, motivation, aggression, competition, mental focus and risk seeking.