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Questions tagged [risk]

Risk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an undesirable outcome). The notion implies that a choice having an influence on the outcome sometimes exists (or existed). Potential losses themselves may also be called "risks". Any human endeavor carries some risk, but some are much more risky than others.

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Why do some travel insurances exclude country of citizenship?

It seems that it is common practice among many (but not all) travel insurance companies to exclude country(ies) whose citizenship the traveler possesses (even if the traveler does not live in his ...
Attilio's user avatar
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3 votes
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Diversification vs VTSAX

What advantage do I gain by holding a mix of mutual funds over just VTSAX? One oughtn't put all one's eggs in one basket. One mitigates risk by holding multiple distinct asset classes in multiple ...
StevePoling's user avatar
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Have changes to mortgage standard variable rates ever diverged much from changes to base rate?

Historically, although SVRs tend to be a few percent above base rate, has any lender's SVR ever made a drastic change that wasn't caused by a change in base rate? This is in the context of risk of ...
Sideshow Bob's user avatar
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What do I need to know about investing in developing countries?

My wife is Sri Lankan and we have some cash assets there, but we both live in Australia. Sri Lanka has restrictions on taking money out of the country - essentially it looks like you can only take $...
dwjohnston's user avatar
2 votes
1 answer
93 views

How to estimate the profitability and risk of investing in rental properties?

There was a recent question, Is it a good idea, to buy a flat with a loan, whilst using the rent to pay it off?, which was closed due to asking opinion-based advice. However, the question can be ...
juhist's user avatar
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1 vote
2 answers
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Why does NPV correspond to "cash in our pockets now" for risky investments?

For a positive NPV project with risk free cash flows and assuming access to a competitive money market, it is trivial to show (by appropriately borrowing or lending at the risk-free rate) that the ...
EE18's user avatar
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0 answers
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Understanding overnight debt fund portfolios

I'm trying to understand the differences between overnight funds and a bank savings account or fixed deposit in terms of safety. These are both common ways to park money for short periods. I know that ...
Faheem Mitha's user avatar
1 vote
0 answers
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Computing risk-neutral probability of spot rates

I am trying to use a binomial model to price options wtih bonds as the underlying security.If the current term structure is flat at 6%, but next year, I assume the one-year spot rate will be either 5% ...
student12345's user avatar
1 vote
1 answer
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Finding Uncorrelated Assets

I own a particular security. How can I find another security, which has uncorrelated or negatively correlated (anti correlated) returns with the one I already own? I would like both securities to ...
Lance's user avatar
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59 views

How to mitigate systematic risk?

I'm studying for the SIE in the United States. I'm learning about the different risks and how to mitigate them. The only way given to minimize systematic risk is to hedge using puts on an index such ...
Cotton Headed Ninnymuggins's user avatar
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What are the implications of ETFs lending out their holdings?

I've noticed some ETFs describing how they can lend out their holdings, usually for some amount of collateral (cash, U.S. government securities, stand-by letters of credit, etc). If we take GDX, for ...
Robert Campbell's user avatar
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Are uninsured financial institutions riskier places to keep my wealth, now that cryptocurrencies make embezzlement easier?

Suppose that one or more high-level officers at a stock brokerage, or other retail financial institution, decide to embezzle most of the assets held there. The embezzlers liquidate the assets into ...
NotAnAccountant's user avatar
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79 views

Options trade - statistically expected return calculation?

I also asked this question here, for it to get more visibility. I am calculating expected return for composite option strategies based on event probabilities provided by the broker. For example, ...
Kagaratsch's user avatar
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320 views

Are there speculative ETFs analogous to investment funds?

Are there ETFs that bundle up highly speculative investments with high risk/reward profiles? For instance, they might currently include Zambian, Nigerian, Brazilian and Venezuelan bonds; ...
Zubo's user avatar
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Thinking about opening a Stocks & Shares ISA- is it best to invest a lump sum, or make smaller regular payments?

I have some cash on which I am not currently earning any interest, and with savings rates as low as they currently are, I am thinking about investing in the stock market to try and make the most of ...
Noble-Surfer's user avatar