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 ?
Investment consultants or agents may predict that their competitors are more risk seeking, but make more conservative decisions for their clients.
125, indicating risk seeking. This trend changes to risk neutrality for p=.25, and to risk aversion for larger probabilities.
Such interviews may offer more evidence as to the levels of risk seeking and risk aversion among executives.
Choosing A in Problem 3 shows risk seeking behavior while choosing B signals risk aversion.
(139) For instance, defendants who profited from a breach of contract and are being sued for damages may compare both trial and settlement to the status quo, view them as losses, and thus exhibit risk seeking. (140)The same defendants, however, would be risk-averse if they were to evaluate these prospects in reference to their position before profiting from the breach of contract, which makes both trial and settlement appear as gains.
The pursuit of market opportunities in an uncertain context by Technico cannot be simply viewed as an exercise in risk tolerance or risk seeking, although mitigation of some of its perceived risks--accommodation--helped Technico in acclimatising to the uncertainties of the Chinese context.
--Condition 2: Who is risk seeking on the domain of losses (Kahneman and Teversky, 1979).
This study provides the first evidence of the effects of individual audit partners' risk seeking, risk aversion, and risk neutrality attitudes in a business risk context.
Five variables clustered under the rubric of entrepreneurial orientation (innovativeness, proactiveness, risk seeking, competitive aggressiveness, and autonomy seeking) plus environmental munificence.
Target real estate investment portfolios parameters for different investors with different reliability levels, when variables are dependable Reliability Target portfolio level characteristics for risk averse investor, [U.sub.1] [a.sub.1], % [[sigma].sub.1], % 2 quartile 8,8039 4,4622 3 quartile 12,3244 4,7375 maximum 22,0079 4,8875 Reliability Target portfolio characteristics level for the average risk seeking investor, [U.sub.2] [a.sub.2], % [[sigma].sub.2], % 2 quartile 9,7717 5,3874 3 quartile 13,7332 5,6443 maximum 26,0705 6,1119 Reliability Target portfolio level characteristics for the risk seeking investor, [U.sub.3] [a.sub.3], % [[sigma].sub.3], % 2 quartile 10,3718 6,3611 3 quartile 15,0438 6,7094 maximum 28,1136 6,8254 Table 3.
Whether or not someone exhibits risk aversion or risk seeking depends both on the situation and the individual (e.g.
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.