Define: Downside

Business, Legal & Accounting Glossary

Definition: Downside



What is the dictionary definition of Downside?

Dictionary Definition


  1. A disadvantageous aspect of something that is normally advantageous.
  2. A downward tendency, especially in the price of shares etc.

Advertisement



Full Definition of Downside


In business jargon, the downside is the risk of an unfavorable outcome to a particular activity. In an investment context, the downside is generally understood to be the risk of price of decline, sometimes called downside risk. Sophisticated means of quantifying the downside to an investment portfolio have been constructed. For instance Value at Risk methodologies (VaR) compute a number that expresses the maximum amount a portfolio is likely to fall (a measure of downside) in a given period, subject to a certain confidence interval. Downside protection is the name given to any strategy for limiting the magnitude of downside. Having what is called a protective put on an owned stock is the classic example of downside protection. With a protective put, the shares can always be sold for at least the strike price of the put by exercising the option if the share price falls below the stroke price before the put’s expiration date.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/downside/
Modern Language Association (MLA):
Downside. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 05, 2020 https://payrollheaven.com/define/downside/.
Chicago Manual of Style (CMS):
Downside. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/downside/ (accessed: April 05, 2020).
American Psychological Association (APA):
Downside. PayrollHeaven.com. Retrieved April 05, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/downside/

Definition Sources


Definitions for Downside are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020