Risk Curve


DEFINITION of 'Risk Curve'

A two-dimensional plot of real or projected financial harm/risk (vertical axis) versus real or projected financial reward (horizontal axis). Generally speaking, the curve balloons when the underlying item offers greater returns and contracts when it offers lower returns compared to risk.


Risk curves can be plotted using practically anything for variables, as the very existence of a curve tends to suggest a relationship or correlation. A risk curve allows for an instant summation of the risks involved in a particular endeavor, making it very easy to use as a decision-making tool.

  1. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  2. Risk Seeking

    The search for greater volatility and uncertainty in investments ...
  3. J-Curve Effect

    A type of diagram where the curve falls at the outset and eventually ...
  4. Risk Averse

    A description of an investor who, when faced with two investments ...
  5. Risk Lover

    An investor who is willing to take on additional risk for an ...
  6. Risk

    The chance that an investment's actual return will be different ...
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