A rate of return symbolized R-sub-f is independent of this quantity in the formula for the Treynor and Sharpe ratios.
This quantity's namesake premium is the slope of an SML graph. A rate of return symbolized R-sub-f is independent of this quantity in the formula for the Treynor and Sharpe ratios. One type of it correlates with a measure symbolized beta along the x-axis of graphs in the capital assets pricing model. A concave utility function results from avoidance to this quantity according to Kahneman and Tversky, who developed prospect theory to deal with its presence in decision-making. The ability of agents to alter this value without bearing costs creates moral hazard, and firms in interconnected markets can cause collapse when they have the "systemic" type. It can be lessened by diversification. For 10 points, name this economic quantity, the chance that an investment or decision will bring losses.
This quantity's namesake premium is the slope of an SML graph.
financial risk