Risk

Risk is the variability of returns as well as the possibility of losing capital. Investments offering the opportunity for higher returns generally involve higher risks.

Investment can involve such risk factors as credit risk (the non-return of capital or non-payment of interest), currency risk (movements in currencies that may be detrimental to returns), individual asset risk (assets in a portfolio can carry different levels of risk), inflation risk (an outbreak of inflation can unexpectedly reduce real returns), liquidity risk (an investment may prove difficult to readily sell at the market price), investment manager risk (manager underperformance), market risk (volatility of investment markets) and political risk (instability of governments). (See Risk averse and Standard deviation)
< Back