DEFINITION of 'Risk Curve'
A twodimensional 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.
INVESTOPEDIA EXPLAINS 'Risk Curve'
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 decisionmaking tool.
RELATED TERMS

Systematic Risk
The risk inherent to the entire market or entire market segment. ... 
Risk Seeking
The search for greater volatility and uncertainty in investments ... 
JCurve Effect
A type of diagram where the curve falls at the outset and eventually ... 
Standalone Risk
The risk associated with a single operating unit of a company ... 
Risk Averse
A description of an investor who, when faced with two investments ... 
Risk
The chance that an investment's actual return will be different ...
RELATED FAQS

How does the market share of a few companies affect the HerfindahlHirschman Index ...
In economics and commercial law, the HerfindahlHirschman Index (HHI) is a widely used measure that indicates the amount ... Read Full Answer >> 
What does the rule of 70 indicate about a country's future economic growth?
The rule of 70 could be used to indicate the approximate number of years that it would take a company's economic growth to ... Read Full Answer >> 
How is the rule of 70 related to the growth rate of a variable?
The rule of 70 is related to the growth rate of a variable because it uses the growth rate in its approximation of the number ... Read Full Answer >> 
What are the benefits of using ceteris paribus assumptions in economics?
Most, though not all, economists rely on ceteris paribus conditions to build and test economic models. The reason they do ... Read Full Answer >> 
What is the difference between the rule of 70 and the rule of 72?
The rule of 70 and the rule of 72 give rough estimates of the number of years it would take for a certain variable to double. ... Read Full Answer >> 
What is the risk return tradeoff for bonds?
Macaulay duration and modified duration are mainly used to calculate the durations of bonds. The Macaulay duration calculates ... Read Full Answer >>
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