Investment risk is the probability that your investment will lose value. It is measured by the volatility of investment returns. If the rate of return of a stock or other security moves up and down over a wide range, the stock is said to have more investment risk than one whose returns fluctuate less. For example, a stock you bought for $10 that fluctuates between $16 and $2 over the next year has more risk than if its price fluctuates between $12 and $8. You can reduce risk to a large degree by holding a diversified portfolio of investments.
