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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 ?
Only you can decide your appetite for potential losses and this will decide the proportion of your assets that you place in a riskier investment compared to less risky ones.
With borrowing costs expected to remain at record lows in the near future investors moved into riskier assets.
She continued said: The title of this FERMA Forum is Living and Working in a Riskier World.
The bank said that it has moved more than USD5bn of riskier Asia-Pacific deposits into alternative cash investments, as the cost of holding them has increased.
Fitch notes that the increase in risk is small so far, but outlines its concerns: "While there has not been a huge shift by insurers from bonds into riskier asset classes, credit-risk exposure within bond portfolios has materially increased," the ratings agency says.
The initial reaction to Obama's re-election, however, was positive for equities and riskier currencies because the Republicans had expressed opposition to the Federal Reserve's quantitative easing policy.
19, the BOJ decided to expand its asset purchase program by 10 trillion yen to a total of 80 trillion yen to support the economy but stopped short of increasing purchases of riskier assets.
The researchers conclude that people relying on a multivitamin pay a hidden price, believing they have greater invulnerability and so adopt lazy, riskier behaviours that may actually lead to the exact opposite health outcomes they desire.
CAIRO: The Egyptian pound posted one of its biggest daily gains in nearly six years on Thursday as investors sought riskier assets after the US Federal Reserve said it would buy billions of dollars in debt.
A more defensive approach to investment is likely to continue for some time but wealth managers can gently shape their clients' attitudes, and through reassurance, guide them toward riskier products which offer better returns.
Small-capitalization stocks climbed as better-than-expected new-home sales and encouraging second-quarter earnings emboldened investors to pile into riskier assets.
Summary: LONDON: Oil stood $69 a barrel after falling to its lowest in over seven months on Wednesday, pressured by high US stockpiles and as concern over tighter financial regulation dampened appetite for riskier assets.