what is the typical relationship between risk and return?
102196
The risk-return relationship. Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.
326866
Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.
1099870
['Risk of the investment. A company or investor may insist on a higher required rate of return for what is perceived to be a risky investment, or a lower return on a correspondingly lower-risk investment. ... ', 'Liquidity of the investment. ... ', 'Inflation.']
313971
A positive correlation exists between risk and return: the greater the risk, the higher the potential for profit or loss. Using the risk-reward tradeoff principle, low levels of uncertainty (risk) are associated with low returns and high levels of uncertainty with high returns.
1302028
The firm must compare the expected return from a given investment with the risk associated with it. Higher levels of return are required to compensate for increased levels of risk. In other words, the higher the risk undertaken, the more ample the return – and conversely, the lower the risk, the more modest the return.
1086180
While investing typically offers better returns than saving, it also carries more risk, as the value of your investment bounces up and down — at least, when looked at in the short term. ... Speculating involves putting your money at risk with the hope that you will earn a high return in a short period of time.
802040
The required rate of return represents the minimum return that must be received for an investment option to be considered. Expected return, on the other hand, is the return that the investor thinks they can generate if the investment is made.
386634
The risk is the chance that you will lose some or all the money you invest. ... Bonds in general are considered less risky than stocks for several reasons: Bonds carry the promise of their issuer to return the face value of the security to the holder at maturity; stocks have no such promise from their issuer.
463895
The slope of the SML, which is the difference between the expected return on a market portfolio and the risk-free rate. In other words, it is the reward investors expect to earn for holding a portfolio of beta of 1. The equation of the SML showing the relationship between expected return and beta.
4140
The market risk premium is the additional return that's expected on an index or portfolio of investments above the given risk-free rate. On the other hand, an equity risk premium pertains only to stocks and represents the expected return of a stock above the risk-free rate.
1218182
Financial risk generally relates to the odds of losing money. ... Credit risk, liquidity risk, asset-backed risk, foreign investment risk, equity risk, and currency risk are all common forms of financial risk. Investors can use a number of financial risk ratios to assess a company's prospects.
505397
['Risk of the management and human resources. ... ', 'Transactions with related parties. ... ', 'Success of former, current and future investment projects. ... ', "Issuer's business can be adversely affected by loss of major customers. ... ", 'Interest rate risk. ... ', 'Currency risk.']
409653
Total return includes interest, dividends, and capital gain, such as an increase in the share price. In other words, a return is retrospective, or backward-looking. ... Yield is the income returned on an investment, such as the interest received from holding a security.
49604
The correlation between the hazards one runs in investing and the performance of investments is known as the risk-return tradeoff. The risk-return tradeoff states the higher the risk, the higher the reward—and vice versa.
1224532
The risk-return relationship. Generally, the higher the potential return of an investment, the higher the risk. ... Once your portfolio has been fully diversified, you have to take on additional risk to earn a higher potential return on your portfolio.
867878
Divide SUM PRODUCT by SUM to get weighted average return. Return is defined as the gain or loss made on the principal amount of an investment and acts as an elementary measure of profitability.
64771
The rate of return is a specific way of expressing the total return on an investment that shows the percentage increase over the initial investment cost. Yield shows how much income has been returned from an investment based on initial cost, but it does not include capital gains in its calculation.