what is the basic relationship between risk?
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A positive correlation exists between risk and return: the greater the risk, the higher the potential for profit or loss. Using the risk-reward tradeoff principle, low levels of uncertainty (risk) are associated with low returns and high levels of uncertainty with high returns.
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The relationship between risk and required rate of return is known as the risk-return relationship. It is a positive relationship because the more risk assumed, the higher the required rate of return most people will demand.
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A risk is a potential occurrence (positive or negative). An opportunity is a possible action that can be taken. Opportunity requires that one take action; risk is something that action can be taken to make more or less likely to occur but is ultimately outside of your direct control.
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The frequency and cost to compensate for the risk explains how much you pay on your insurance premiums. By understanding the relation between risk and insurance, you get a better appreciation of insurance and how to reduce its costs.
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According to PMBOK, risk can be defined as an uncertain event or condition that results in a positive or negative effect on a project's objectives. Whereas, an issue can be defined as an event or condition that has already happened and has impacted or currently impacting the project objectives.
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Systematic risk refers to the probability of loss linked with the whole market segment such as changes in government policy for the specific industry. While risks associated with a particular industry is referred to as unsystematic risks like labor strike.
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Risk is the chance of loss, and peril is the direct cause of the loss. If a house burns down, then fire is the peril. A hazard is anything that either causes or increases the likelihood of a loss.
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Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment. Quantifiably, risk is usually assessed by considering historical behaviors and outcomes.
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In economics, “risk” refers to the likelihood that a person will lose money on an investment. ... On the other hand, if an investor only takes a small risk, he or she is likely to earn a small reward. This principle is called the risk/reward trade-off.
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What are underlying objectives for the definition of risk? In the definition of risk the most fundamental objectives in its definition is uncertainty. and both negative and positive outcomes.
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RISK AND RETURN . 2 The Relationship between Risk and Return Explain the relationship between risk and return The relationship between risk and return is characterized as; the higher the risk there is a better possibility of larger returns.
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Relationship Between Risk Management and Corporate Governance. Risk-taking drives corporations to push ahead and make steep gains. When risks pay off, profitability makes shareholders and stakeholders happy. Technology has created greater global interconnectivity, which is an asset for most businesses.
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Risks and Constraints. A risk is an event that may or may not happen, resulting in unwanted consequences or losses. A constraint is a real-world limit on the possibilities for your project.
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The basic difference is that the odds ratio is a ratio of two odds (yep, it's that obvious) whereas the relative risk is a ratio of two probabilities. (The relative risk is also called the risk ratio).
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Efficient market theory holds that there is a direct relationship between risk and return: the higher the risk associated with an investment, the greater the return. This is intuitive: when we choose investments that we think are more risky, we naturally expect to be rewarded with higher returns.
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Personal risk is anything that exposes you to the risk of losing something of value. Usually, personal risk is associated with your financial investments and insurance. ... The insurance may be in the form of liability insurance.
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Relative risk comparisons and risk differences provide two different perspectives on the same information. Relative risk , i.e., risk ratios, rate ratios, and odds ratios, provide a measure of the strength of the association between a factor and a disease or outcome. Risk difference , i.e., absolute risk,.