Risk refers to the possibility that the actual outcome of an investment will differ from its expected outcome.
More specifically, most investors are concerned about the actual outcome being less than the expected outcome.
The wider the range of possible outcomes, the greater the risk.
Sources of Risk
Risk emanates from several sources. The three major ones are:
1. business risk,
http://myinvestingnotes.blogspot.com/2008/09/business-risk.html
2. interest rate risk, and
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3. market risk.
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Types of Risk
Modern Portfolio Theory looks at risk from a different perspective. It divides total risk as follows:
Total risk = Unique risk + Market risk
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