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Chapter 5: Understanding Risk

Horizontales
Measure of the likelihood that and event will occur.
The amount added to an investment to compensate for the riskiness of an investment.
Also known as the expected value.
The square root of the variance.
Find investments whose payoffs are unrelated to reduce risk.
The probability-weighted sum of possible returns for an investment.
Defined as the average of the squared deviations of the possible outcomes from their expected value.
Performance of a group of experienced money managers.
The practice of borrowing to finance part of an investment
Verticales
The amount you could get back from an investment.
The possibility of loss or injury.
An investor who is indifferent between investments with different risks but the same expected return.
The type of insurance that pays for damage and injuries to others if you cause an accident.
The probability-weighted sum of possible values of an investment.
A concept used to assess a sort of catastrophic risk.
Risks that are economywide.
The principle of holding more than one risk at a time.
Strategy of reducing idiosyncratic risk by making two investments with opposing risks.
A type of investment whose future value is unknown with certainty.