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Option B
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# Risk Calculator

If you want to determine the best investment opportunity from two or more options, this risk calculator can help you find the most precise investment plan for you.

Statistically, risk is defined as the probability of a certain event or outcome. It indicates the future possibility of the earning or outcome from a certain investment. In mathematical form, The product of probability and loss is known as a risk in statistics. Whereas the probability relates to the chances of failure and, on the other hand, loss refers to the damage investors have to bear at the point of failure.

## Formula of Risk Calculator

If you want to evaluate the risk instantly, you can use our calculator, or to find it manually, you can use the formula listed below:

Risk = probability * loss

Note:

To calculate midrange, you can use our Midrange Calculator.

### Example

For a more precise understanding of how to calculate risk, let us have an example below:

Suppose an investor has two investment opportunities. The first opportunity required investment with no return in terms of capital (loss) of $1000. Still, the failure probability is around 12%, whereas, in the second opportunity, the investment with no return in terms of capital (loss) is around$2000, but the failure probability is around 7% only. Find out the best opportunity with less risk for an investor.

Given data

1st opportunity:

Loss = $1000 Failure probability = 12% 2nd opportunity: Loss =$2000
Failure probability = 7%

To Find

Investment with less risk = ?

Solution

To find the work, you can use the formula listed below:

Risk = probability * loss

Putting values in the formula:

1st opportunity:

Risk = (12%) * ($1000) =$120

2nd opportunity:

Risk = (7%) * ($2000) =$140

So from the above results, we can see that the 1st opportunity has a low-risk factor.

### How to use the Risk Calculator?

The steps to use the risk calculator are as follows:

Step 1: Enter the value of loss in the first required input.

Step 2: Enter the value of failure probability in the second required input.

Step 3: The calculator will automatically display an answer on the screen.

### Calculator use

To find out the risk-free investment, you can use our free online risk calculator. You can use our tool before investing in real estate, trading, stocks, or any other type of investment to check risk factors.