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Uncertainty

• Usually refers to risk or volatility.

 
 Embedded terms in definition
 Risk
Volatility
 
 Referenced Terms
 Basis risk: Is the risk in the basis time series. This can be influenced by many variables although the total impact is less than the exposure for a naked position. When a hedge is placed, price risk is transformed into basis risk. Basis risk is substantially less than price or inventory risk in terms of dollars.The Uncertainty about the basis at the time a hedge may be lifted. Hedging substitutes basis risk for price risk.

 Bird in the hand argument: The belief, in support of dividend relevance theory, that current dividend payments ( a bird in the hand ) reduce investor Uncertainty and ultimately result in a higher value for the firm's shares.

 Business and industry risk: Uncertainty of an investment's return due to a fall-off in business that is firm-related or industry-wide.

 Call risk: The combination of cash flow Uncertainty and reinvestment risk introduced by a call provision.

 Country risk: General level of political and economic Uncertainty in a country affecting the value of loans or investments in that country.See sovereign risk.

 
 Related Terms
 Inflation uncertainty

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