Equity risk is a type of market risk. Equity risk states that depreciation occurs to the value of an individual’s investments due to stock market movements that result in loss of money for the individual.In stock markets or equity markets, the measurement of equity risk is commonly done with the help of standard deviation of the price of a security over a period of time.
The standard deviation would represent the usual fluctuations that are anticipated in the specified security over and under the average or mean. Nevertheless, the majority of investors do not take into account variations over the average yield as risk.
As a result, a handful of economists opt for other methods for the purpose of measurement of equity risk. Equity risk is considered as a standardized element of market risk. Equity risk is dependent on the assumption or anticipation that there is always a variation in stock prices and this risk is faced by the stock investors.
Last Updated on : 1st July 2013