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In business and finance the term portfolio refers to the collection of various investment of an individual or a firm in various bonds, stocks or other securities and instruments. Portfolio risk is refers to the extent of risk or possible variation associated regarding the amount of return the individual or the firm is likely to earn on the portfolio.
Broadly a specific investment in a portfolio can be judged for its riskiness along a scale. On one end of this scale a risk less investment offers a guaranteed rate of return on the amount invested, but generally the quantity of return is low. On the other end of the scale are very risky investment which may end giving a very high return or may actually result in a heavy loss. The risk of the total portfolio is assessed on the basis of combined likelihood of variation in the combined profit or loss on all the investments in the portfolio.
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