Investors can use various active management strategies to manage their portfolios. Usually, they hire a portfolio manager to track the performance of their portfolio. The managers can make decisions regarding the portfolio with the goal of outperforming the market. However, they must also manage the risks associated with it. One …

Investors can use both the Treynor and the Sharpe ratio to measure the risk-adjusted rate of return. However, both are different from each other. While both can help investors gauge the risk on their investments, they both use a different approach to do so. Therefore, it is crucial to understand …

Investors use various investment strategies to ensure they maximize their returns. Some of these strategies may be long-term, while others may last for a short time. Each type of strategy has its own benefits and drawbacks. One strategy often used by investors and speculators is short selling. What is Short …

Risk defines a degree of uncertainty that may come during various stages in an entity’s lifecycle. The concept of risk is most prevalent in economics and finance. For businesses or investors, identifying and dealing with risk is crucial. It also helps to understand the differences between the types of risk …

There are two terms related to the risk that are crucial for investors to understand. These are risk tolerance and risk appetite. Both of them have various similarities. However, there are also some differences between them. What is Risk Tolerance? Risk tolerance represents the amount of risk that investors can …

What is Risk Aversion in economics? Risk aversion is a term often associated with economics and finance. It describes the tendency of people to prefer low uncertainty outcomes to those with high uncertainty. Risk aversion applies to several other fields of life as well, such as investing. Risk-averse people are …

For companies and businesses, identifying and managing various types of risks are crucial. Mostly, companies use traditional financial risk management techniques to mitigate them. Due to their nature, financial risks are most prevalent for companies. Therefore, these companies often focus on financial risks compared to other types. What are Non-Financial …

Companies or businesses face various types of risks during their lifetime. Identifying and dealing with these risks is crucial for the long-term survival of those companies. While there are some risks that may not occur often, there are some others that companies must manage continuously. Among these, financial risks are …

Risk and uncertainty can play a significant role in various fields of life. Lately, they have become more prevalent than ever. In most cases, the prevalence comes from various financial disasters making the headlines in the news. For most of these disasters, the management of risk and uncertainty play a …

Investors use various investment strategies to diversify their portfolios. For example, they may use asset allocation, which includes dividing investments into several asset classes. Some investors also prefer building a diversified portfolio by investing in various locations. These may consist of both domestic and international markets or investments. When it …