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.
As Holt and Laury (2002) find evidence that individuals tend to be more risk seeking when they face hypothetical choices, we classified as risk averse the 90 participants who chose option B for the first time in round 6 or later.
Such interviews may offer more evidence as to the levels of risk seeking and risk aversion among executives.
A and C are risk seeking choices while B and D are risk averse options.
142) Hence, people will tend to exhibit risk aversion when choosing among fair outcomes but risk seeking when facing unfair ones.
Condition 2: Who is risk seeking on the domain of losses (Kahneman and Teversky, 1979).
Practically, our findings suggest that risk seeking tendencies inherent in potential loss situations should be explicitly recognized by audit partners and audit firm management committees so that this human tendency toward risk seeking in potential loss situations can be managed appropriately.
In contrast, proactiveness (hypothesis 2), competitive aggressiveness (hypothesis 3), and risk seeking (hypothesis 4) were not supported as significant individual contributors to performance: For hypothesis 2, proactiveness (t = -.
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.
This 6-item scale was designed specifically to measure risk seeking and aversion with regard to investment.
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.