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 ?
But is this association because risk-taking is indeed a masculine characteristic?
This dynamics further empowers the risk-taking characteristics of the acquirer, as higher the acquirer's risk-taking ability, the more it will be willing to hold out to purchase the target firm.
Our second objective in conducting Study 2 was to test the robustness of the envy effect on risk taking using the dependent measure of financial risk taking, instead of the recreational risk-taking measure used in Study 1.
With regard to risk-taking, prior research has shown that differences in how parents interact with sons and daughters are related to children's risk-taking [9,35,36].
and strategic marketing professor Peter Dickson discovered that small, measured risk-taking behaviors can increase confidence and self-efficacy, the "I think I can" positive psychology that enhances goal achievement.
The team hopes that these findings will provide a way to develop effective cognitive strategies to help these sorts of adolescents to avoid indulging in risk-taking behaviours.
However, in relation to the extensive research on the risk-taking behavior of banks, there are a small number of studies investigating the risk-taking behavior of insurers.
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., 2004; Bancroft, Janssen, Strong, Carnes, et al., 2003; Bancroft, Janssen, Strong, & Vukadinovic, 20031 factors functionally impact risk-taking behavior in real time.
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.
It's possible, however, that some diversification risk has an upside for the economy, given current regulatory concerns over excessive risk-taking. Specifically, as diversification risk increases, so should the incentive for employees to mitigate risk-taking at work.
Risk-taking may then be fostered by incentive structures that focus on rewarding very good results and do not penalize bad results.