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Finance Dictionary and Glossary of Investment Terms
Limited Risk
Definition 1.
The risk of an investment that has a predetermined maximum downside potential, which is usually the initial amount invested.
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Definition 2.
The risk inherent in options contracts, which is much lower than that of a futures contract, which has unlimited risk. The maximum loss in buying a call option, for example, is the premium paid for the option.
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Definition 3.
An investment whose loss cannot exceed a specific amount, usually the amount invested. Examples include options, buying stocks, and buying bonds. opposite of unlimited risk.
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