risk

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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 ?
The Europeans were more conservative than the rest, with respectively 67 percent German and British, and 66 percent of French believing their IT policies held back risk-taking, versus just 45 percent of Chinese respondents and 44 percent of respondents in India.
Among those students, adolescents and young people who relied on gist measures of online risk-taking were more "protective" when asked about their intentions of engaging in future risky online behavior.
Risk-taking teens also had increased activity between regions of the prefrontal cortex and the nucleus accumbens, a centre for reward sensitivity that is often implicated in addiction research.
Understanding the risk-taking behavior of financial institutions, including banks and insurance firms, is important to not only regulators but also claimholders of these firms because the behavior can substantially affect values of the firms and thus how the values are distributed between claimholders.
The majority of crashes involve drivers risk-taking and could be easily prevented by drivers following basic safe driving principles, such as staying well within speed limits, slowing right down for bends, brows, bad weather and in built-up areas, never using a phone at the wheel, and never driving under the influence of alcohol or drugs.
Moreover, self-reports of risk-taking behavior or biological indicators cannot provide meaningful information regarding fundamental processes that underlie risk-taking behavior, nor are they well-suited for experimental research that can allow causal statements regarding how various contextual (Boldero, Moore, & Rosenthal, 1992; Cooper, 2006; Leigh & Stall, 1993) and mood-related (Bancroft et al.
The study also discovered that people with either psychopathic or entrepreneurial intentions persisted through adversity in a risk-taking task.
Family affluence is correlated with risk taking: those in the most affluent groups are less likely than others to engage in risk-taking behaviour.
Specifically, as diversification risk increases, so should the incentive for employees to mitigate risk-taking at work.
An important strand of the literature on risk-taking in tournaments examines the impact of revealed heterogeneity of agents on risk-taking (either right from the start of the tournament or at an intermediate stage).
Second, the parents with whom they work may fear criticism and accusations of poor or negligent parenting if they allow their children to engage in risk-taking activities.
They reckon the different approach to risk-taking may be down to evolution - for survival, men needed to be risk-taking to establish status while women needed to avoid risks to take care of their children properly.