What does the term risk refer to in financial investments?

The term risk in financial investments refers to the degree of uncertainty regarding the potential return on an asset. Essentially, risk encompasses the variation in the returns that an investor might expect, which can range from losses to gains. Every investment carries some level of risk, influenced by various factors such as market conditions, economic influences, and the specific characteristics of the asset itself. Understanding risk is crucial for investors as it helps them make informed decisions about their portfolios, balancing potential rewards against the possibility of loss. In this context, option B accurately captures the essence of risk in the investment world.