volatility

Vocabulary Word

Definition

'Volatility' refers to something that changes quickly and unexpectedly. Like a stock market where prices can go up and down rapidly without any pattern.

Examples in Different Contexts

In financial analysis, understanding 'volatility' is crucial for assessing investment risk. A portfolio manager might assert, 'By analyzing price volatility, we can optimize our portfolio’s risk-reward profile and enhance investment resilience against market fluctuations.'

Practice Scenarios

Business

Scenario:

This week has seen some significant swings in the value of our stocks. It seems we're dealing with a high degree of unpredictability.

Response:

Yes, it looks like the volatility of our shares in the market is higher than expected.

Environmental Science

Scenario:

The pollutant dissipation in the lake has been quite rapid. We may need to account for the possible variation in the nature of these substances.

Response:

Agreed. We should consider the volatility of the pollutants while making our forecast models for the ecosystem.