10 Questions
Risk is defined in financial terms as the chance that an outcome or investment's actual ______ will differ from an expected outcome or return.
gains
Risk includes the possibility of losing some or all of an original ______.
investment
Quantifiably, risk is usually assessed by considering ______ behaviors and outcomes.
historical
In finance, ______ deviation is a common metric associated with risk.
standard
Standard deviation provides a measure of the ______ of asset prices in comparison to their historical averages in a given time frame.
volatility
What is the primary purpose of considering historical behaviors and outcomes in risk assessment?
To quantify risk
What is the relationship between standard deviation and risk in finance?
Standard deviation is a metric associated with risk, providing a measure of the volatility of asset prices.
How does the concept of risk relate to the possibility of losing some or all of an original investment?
Risk includes the possibility of losing some or all of an original investment.
What is the purpose of using standard deviation in finance?
To provide a measure of the volatility of asset prices in comparison to their historical averages.
What is the key characteristic of risk in financial terms?
The chance that an outcome or investment's actual gains will differ from an expected outcome or return.
Study Notes
Risk in Finance
- Risk refers to the possibility that an investment's actual returns will differ from expected returns.
- Risk includes the chance of losing some or all of the original investment.
Assessing Risk
- Historical behaviors and outcomes are considered when quantifying risk.
- Standard deviation is a common metric used to measure risk in finance.
- Standard deviation provides a measure of asset price volatility compared to historical averages in a given time frame.
Risk in Finance
- Risk refers to the possibility that an investment's actual returns will differ from expected returns.
- Risk includes the chance of losing some or all of the original investment.
Assessing Risk
- Historical behaviors and outcomes are considered when quantifying risk.
- Standard deviation is a common metric used to measure risk in finance.
- Standard deviation provides a measure of asset price volatility compared to historical averages in a given time frame.
Assess the concept of risk in finance, including its definition, measurement, and volatility of asset prices. Learn about standard deviation and its role in evaluating investment risk.
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