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 ?
these guidelines provide some definitions to the line between realism and risk, and represent our commanders' judgment of acceptable risk.
During 2013 it became clear that important prerequisites for Project 1 of the modernization program in the NAV was not feasible with acceptable risk.
He added: "We clearly have a different opinion about what is an acceptable risk.
Members of all parties on the county council, when examining this, took the balanced view that the risk of an academy failing is outside the acceptable risk tolerance.
These ratings bear testament to AUB's strong underlying business fundamentals realised through effective and focused execution of its well defined strategies within a prudent and acceptable risk management framework.
Paul Sallis's bitch can trap better than she did on Tuesday and at 16-1 a small each-way punt looks an acceptable risk.
Topics include an overview of ANSI Z10, serious injury prevention, human error reductions, achieving acceptable risk levels, implementation and operation, incident investigation, audit requirements, and management review.
It claimed that the customers had a "higher than acceptable risk profile".
The bank said it has sent letters to 160,000 people with a "higher than acceptable risk profile" informing them that their credit cards will stop working in 35 days.
They were being targeted because they had a "higher than acceptable risk profile".
Mr Harper said: "As the current prices are out of reach of most people, this may be regarded as an acceptable risk.
Recognizing when acceptable risk has crossed into imprudence requires developing a certain skill: it's called judgment.