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2. Risk-free rate - Wikipedia

   en.wikipedia.org/wiki/Risk-free_rate

   The risk-free rate is also a required input in financial calculations, such as the Black–Scholes formula for pricing stock options and the Sharpe ratio. Note that some finance and economic theories assume that market participants can borrow at the risk-free rate; in practice, very few (if any) borrowers have access to finance at the risk free ...

3. Single-index model - Wikipedia

   en.wikipedia.org/wiki/Single-index_model

   The term () represents the movement of the market modified by the stock's beta, while represents the unsystematic risk of the security due to firm-specific factors. Macroeconomic events, such as changes in interest rates or the cost of labor, causes the systematic risk that affects the returns of all stocks, and the firm-specific events are the ...

4. Sharpe ratio - Wikipedia

   en.wikipedia.org/wiki/Sharpe_ratio

   The risk-free return is constant. Then the Sharpe ratio using the old definition is = = Example 2. An investor has a portfolio with an expected return of 12% and a standard deviation of 10%. The rate of interest is 5%, and is risk-free.

5. Risk-neutral measure - Wikipedia

   en.wikipedia.org/wiki/Risk-neutral_measure

   If in a financial market there is just one risk-neutral measure, then there is a unique arbitrage-free price for each asset in the market. This is the fundamental theorem of arbitrage-free pricing . If there are more such measures, then in an interval of prices no arbitrage is possible.

6. Financial risk modeling - Wikipedia

   en.wikipedia.org/wiki/Financial_risk_modeling

   Financial risk modeling is the use of formal mathematical and econometric techniques to measure, monitor and control the market risk, credit risk, and operational risk on a firm's balance sheet, on a bank's accounting ledger of tradeable financial assets, or of a fund manager's portfolio value; see Financial risk management.

7. Foreign exchange risk - Wikipedia

   en.wikipedia.org/wiki/Foreign_exchange_risk

   Economic risk can affect the present value of future cash flows. An example of an economic risk would be a shift in exchange rates that influences the demand for a good sold in a foreign country. Another example of an economic risk is the possibility that macroeconomic conditions will influence an investment in a foreign country. [8]