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Systematic Risk
the failure of one company leads to the failure of others, ths risk can't be diversified away.

Risk
the potential for unexpected events to occur.

risk aversion
the tendency to avoid additional risk.

riskreturn relationship
most people will demand a higher rate of return if there is a higher risk.

uncertainty
chance, or probability, of an unexpected outcome.

expected return
the mean of the probability distribution of possible outcomes.

risk tolerant
more willing to take on risk.

What does standard devieation indicate?
the likelihood that an outcome different from what's expected will occur.

standard deviation
a numerical indicator of how widely dispersed the possible values are around a mean.
more dispersed = higher std. dev. = more risk

Expected Value (Mean) Equation
mu = Sum(V x P)

Standard Deviation Formula
sigma = SQRT[Sum P(V  mu)^{2}]

