Theoretical foundation of enterprise risk - risk and volatility
Modern portfolio theorists do not define risk as a likelihood of loss, but as volatility. Watch this video to find out more.
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If you ask investors what risk they assume when buying stocks, they likely will respond, “losing money.” Modern portfolio theorists do not, however, define risk as a likelihood of loss, but as volatility, which is determined using statistical measures of variance, such as standard deviation and beta.