Analysis Intermediate: Evaluating Risk

Introduction to Evaluating Risk Risks and Returns Standard Deviation Reflects Investment Volatility Beta Compares Investment Risk to the Market Coefficient of Variation Indicates Proportionate Risk Choose Investments Based on Risk Tolerance Summary of Evaluating Risk
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Summary of Evaluating Risk

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Summary of Evaluating Risk

Every investment holds some degree of risk. How much risk is determined by a wide array of factors. Savvy investors try to analyze risk. Indicators such as standard deviation and formulas such as CAPM can be used to help you understand an investment’s risk and potential return, but ultimately your attitudes about risk will be the determining factor in how you invest.

Practical Ideas I Can Start with Today

  • Estimate my risk tolerance. Use this calculator.
  • Create a diversified portfolio of investments that is likely to provide the greatest return in keeping with my risk tolerance.

What you have learned

  1. Risks and Returns
  2. Standard Deviation Reflects Investment Volatility
  3. Beta Compares Investment Risk to the Market
  4. Coefficient of Variation Indicates Proportionate Risk
  5. Choose Investments Based on Risk Tolerance

Find out what you have learned

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