Risk premiumA risk premium is a measure of excess return that is required by an individual to compensate being subjected to an increased level of risk. It is used widely in finance and economics, the general definition being the expected risky return less the risk-free return, as demonstrated by the formula below. Where is the risky expected rate of return and is the risk-free return. The inputs for each of these variables and the ultimate interpretation of the risk premium value differs depending on the application as explained in the following sections.
Ternary relationIn mathematics, a ternary relation or triadic relation is a finitary relation in which the number of places in the relation is three. Ternary relations may also be referred to as 3-adic, 3-ary, 3-dimensional, or 3-place. Just as a binary relation is formally defined as a set of pairs, i.e. a subset of the Cartesian product A × B of some sets A and B, so a ternary relation is a set of triples, forming a subset of the Cartesian product A × B × C of three sets A, B and C.
Reflexive relationIn mathematics, a binary relation R on a set X is reflexive if it relates every element of X to itself. An example of a reflexive relation is the relation "is equal to" on the set of real numbers, since every real number is equal to itself. A reflexive relation is said to have the reflexive property or is said to possess reflexivity. Along with symmetry and transitivity, reflexivity is one of three properties defining equivalence relations.
Converse relationIn mathematics, the converse relation, or transpose, of a binary relation is the relation that occurs when the order of the elements is switched in the relation. For example, the converse of the relation 'child of' is the relation 'parent of'. In formal terms, if and are sets and is a relation from to then is the relation defined so that if and only if In set-builder notation, The notation is analogous with that for an inverse function. Although many functions do not have an inverse, every relation does have a unique converse.
Liquidity riskLiquidity risk is a financial risk that for a certain period of time a given financial asset, security or commodity cannot be traded quickly enough in the market without impacting the market price. Market liquidity – An asset cannot be sold due to lack of liquidity in the market – essentially a sub-set of market risk.
Connected relationIn mathematics, a relation on a set is called connected or complete or total if it relates (or "compares") all pairs of elements of the set in one direction or the other while it is called strongly connected if it relates pairs of elements. As described in the terminology section below, the terminology for these properties is not uniform. This notion of "total" should not be confused with that of a total relation in the sense that for all there is a so that (see serial relation).
Operational riskOperational risk is the risk of losses caused by flawed or failed processes, policies, systems or events that disrupt business operations. Employee errors, criminal activity such as fraud, and physical events are among the factors that can trigger operational risk. The process to manage operational risk is known as operational risk management.
Gait (human)A gait is a manner of limb movements made during locomotion. Human gaits are the various ways in which humans can move, either naturally or as a result of specialized training. Human gait is defined as bipedal forward propulsion of the center of gravity of the human body, in which there are sinuous movements of different segments of the body with little energy spent. Varied gaits are characterized by differences such as limb movement patterns, overall velocity, forces, kinetic and potential energy cycles, and changes in contact with the ground.
Homogeneous relationIn mathematics, a homogeneous relation (also called endorelation) on a set X is a binary relation between X and itself, i.e. it is a subset of the Cartesian product X × X. This is commonly phrased as "a relation on X" or "a (binary) relation over X". An example of a homogeneous relation is the relation of kinship, where the relation is between people. Common types of endorelations include orders, graphs, and equivalences. Specialized studies of order theory and graph theory have developed understanding of endorelations.
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.
