Question

explain briefly the article of risk is not the same as volatility according to Keppler ???

Answer 1

Article Of Risk - Meaning :

Risk Management is the process of minimizing the risks in an organization. It starts with the identification and evaluation of risk followed by optimal use of resources to monitor and minimize the same.A good risk management plan carries number of tools and strategies to mitigate risk.

Volatility:

Volatility is a statistical measure of the dispersion of returns for a given security or market index. In most cases, the higher the volatility, the riskier the security.

Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index.

In the securities markets, volatility is often associated with big swings in either direction. For example, when the stock market rises and falls more than one percent over a sustained period of time, it is called a "volatile" market.

Market volatility can be seen through the VIX or Volatility Index. The VIX was created by the Chicago Board Options Exchange as a measure to gauge the 30-day expected volatility of the U.S. stock market derived from real-time quote prices of S&P 500 call and put options. It is effectively a gauge of future bets investors and traders are making on the direction of the markets or individual securities. A high reading on the VIX implies a risky market.

A variable in option pricing formulas showing the extent to which the return of the underlying asset will fluctuate between now and the option's expiration. Volatility, as expressed as a percentage coefficient within option-pricing formulas, arises from daily trading activities. How volatility is measured will affect the value of the coefficient used.

RISK AND VOLATILITY ARE DIFFERENT FROM ONE ANOTHER

RISK VS VOLATILITY

Risk is the potential of an investment to a It implies temporary fluctutations in price permanent loss of capital Easy to calculate

It is reflected as a result of business fundamentals

resulted in a country in which business is invested

Generally speaking longer the period of holding

lesser the risk of investment.

Risk is hard to calculate