Question

Define the concept of risk in investment.

Answer 1

In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks. Every saving and investment product has different risks and returns.

Answer 2

Risk refers to the likelihood that your investments will lose value and end up costing you money. For example, if you invest in a stock of a company that later goes bankrupt, you will have lost the money that you invested. The chance that the stock would lose value is the risk you accepted when you invested in the stock.

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