Investment Risks Explained

A majority of investors find reduced risk as gainful when deciding upon an investment. The less the investment risk, more will be the amount of investment. The criterion, however, is higher the scope, the stronger the return prospects.

Many categories of finance-related threats constitute a financial risk, especially money transfers that involve default risk of company loans. It is also assumed that it includes only downside risk, which implies the opportunities for capital loss and ambiguity as to its nature. A portfolio's deviation, i.e., standard deviation, is treated as a risk description in the realm of modern portfolio theory.