Distortion risk measureIn financial mathematics and economics, a distortion risk measure is a type of risk measure which is related to the cumulative distribution function of the return of a financial portfolio. The function associated with the distortion function is a distortion risk measure if for any random variable of gains (where is the Lp space) then where is the cumulative distribution function for and is the dual distortion function . If almost surely then is given by the Choquet integral, i.e.
Risk perceptionRisk perception is the subjective judgement that people make about the characteristics and severity of a risk. Risk perceptions often differ from statistical assessments of risk since are affected by a wide range of affective (emotions, feelings, moods, etc.), cognitive (gravity of events, media coverage, risk-mitigating measures, etc.), contextual (framing of risk information, availability of alternative information sources, etc.), and individual (personality traits, previous experience, age, etc.) factors.
Market riskMarket risk is the risk of losses in positions arising from movements in market variables like prices and volatility. There is no unique classification as each classification may refer to different aspects of market risk. Nevertheless, the most commonly used types of market risk are: Equity risk, the risk that stock or stock indices (e.g. Euro Stoxx 50, etc.) prices or their implied volatility will change. Interest rate risk, the risk that interest rates (e.g. Libor, Euribor, etc.) or their implied volatility will change.
Risk aversionIn economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even if the average outcome of the latter is equal to or higher in monetary value than the more certain outcome. Risk aversion explains the inclination to agree to a situation with a more predictable, but possibly lower payoff, rather than another situation with a highly unpredictable, but possibly higher payoff.
Time travelTime travel is the hypothetical activity of traveling into the past or future. Time travel is a widely recognized concept in philosophy and fiction, particularly science fiction. In fiction, time travel is typically achieved through the use of a hypothetical device known as a time machine. The idea of a time machine was popularized by H. G. Wells' 1895 novel The Time Machine. It is uncertain if time travel to the past is physically possible, and such travel, if at all feasible, may give rise to questions of causality.
Shortest path problemIn graph theory, the shortest path problem is the problem of finding a path between two vertices (or nodes) in a graph such that the sum of the weights of its constituent edges is minimized. The problem of finding the shortest path between two intersections on a road map may be modeled as a special case of the shortest path problem in graphs, where the vertices correspond to intersections and the edges correspond to road segments, each weighted by the length of the segment.
Marginal costIn economics, the marginal cost is the change in the total cost that arises when the quantity produced is incremented, the cost of producing additional quantity. In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an infinitesimal amount. As Figure 1 shows, the marginal cost is measured in dollars per unit, whereas total cost is in dollars, and the marginal cost is the slope of the total cost, the rate at which it increases with output.
Credit riskCredit risk is the possibility of losing a lender holds due to a risk of default on a debt that may arise from a borrower failing to make required payments. In the first resort, the risk is that of the lender and includes lost principal and interest, disruption to cash flows, and increased collection costs. The loss may be complete or partial. In an efficient market, higher levels of credit risk will be associated with higher borrowing costs.
Cost curveIn economics, a cost curve is a graph of the costs of production as a function of total quantity produced. In a free market economy, productively efficient firms optimize their production process by minimizing cost consistent with each possible level of production, and the result is a cost curve. Profit-maximizing firms use cost curves to decide output quantities. There are various types of cost curves, all related to each other, including total and average cost curves; marginal ("for each additional unit") cost curves, which are equal to the differential of the total cost curves; and variable cost curves.
Temporal paradoxA temporal paradox, time paradox, or time travel paradox, is a paradox, an apparent contradiction, or logical contradiction associated with the idea of time travel or other foreknowledge of the future. While the notion of time travel to the future complies with current understanding of physics via relativistic time dilation, temporal paradoxes arise from circumstances involving hypothetical time travel to the past – and are often used to demonstrate its impossibility.
