Glossary - Market Volatility
Market volatility refers to the rate at which the price of securities increases or decreases for a given set of returns. It is often measured by the standard deviation of the annual return past a certain period of time. It signifies the risk involved in the price changes of securities - the higher the volatility, the higher the risk. Volatility is a common measure for the uncertainty or risk for a particular security or market index.
Also known as
- Market Fluctuation
- Price Volatility
Use cases examples
- Prospectus: The prospectus details the market volatility experienced in the past fiscal year, emphasizing significant price fluctuations in the company's stock.
- Annual Report: In the annual report, the CEO discusses how market volatility has impacted the company's investment strategy and operating results.
Considerations for investors
- Investors need to assess their risk tolerance in relation to market volatility to optimize their investment portfolios.
- Monitoring market trends and volatility metrics can inform more strategic investments and exit timings.
Considerations for founders
- Founders should consider hedging strategies to manage risk in volatile markets.
- Understanding the impact of market volatility on the company's valuation can be crucial during fundraising.
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