Final answer:
The 4-letter word for the degree of hazard in making a loan or investment is risk. This risk is a crucial aspect to consider against potential returns, and plays a key role in financial decision-making.
Step-by-step explanation:
The 4-letter word for the degree of hazard involved in making a loan or investment is risk. A loan or investment's level of risk is directly proportional to its potential return: typically, the higher the risk, the higher the potential reward but also the greater chance of loss. In financial contexts, risk must always be assessed against possible gains, and this risk/return relationship guides investors and lenders in their decision-making processes. As such, risk management and evaluation are integral parts of financial planning, such as assessing credit scores for loans, considering investment strategies, or analyzing financial markets for supply and demand shifts.