There are many different categorizations of assets that were not covered in this section, but hopefully, it gives you a good idea of how different assets represent different types of risk, and how some are more attractive for different kinds of investors. We’ll take a much closer look at different types of stock classifications in future sections. For investors that view risk in terms of volatility, other classes of stock can seem very risky indeed. Modern Portfolio Theory suggests some ways in which we can control the risk of our overall portfolio while holding individually risky asset classes. Before we can fully understand this principle and how it works, we must first examine how risk is conceptualized and how it is measured.
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Last Updated: 6/25/2018