What is a Downside?
Downside refers to an's potential loss in value.
How Does a Downside Work?
Let's pretend you purchase 100of Company XYZ at $5 per share, for a total of $500. If the shares subsequently fall to $1 per share, your downside equals ($5-$1 = $4) per share, or $400.
The reverse is true for people who short stocks: For them, stock price falls.comes when the
Why Does a Downside Matter?
Downside is the fundamental motive for avoiding any investment -- and with the risk associated with that investment. Higher-risk generally have more downside (but they have more , too); low-risk investments generally have less downside and are thus primarily concerned with preserving the value of the original investment.. The size of the downside, of course, varies with the