Risk And Return Analysis : Notes

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Risk and Return Analysis
Paige Riggs
University of Phoenix

There are various different financial products that one may choose to invest. Each financial product has its special features. Some of the investments have low risks and thus the return is also low. Others have high risks but offer you high potential returns. Returns are the gains or losses from security in a particular period and are usually quoted as a percentage (Carpenter, 2009). The kind of returns investors expect from capital markets are influenced by some factors like risk. The risk is the chance that an actual investment return will be different from expected (Bouleau, 2011). Risk can also be defined as the possibility of losing some or even more of an original investment.
Risk-Return Trade-Off
The bond between risk and return cannot be disregarded due to its significance in business. It is vital to comprehend the correlation between risk and return. Further, knowing how it is affected by time is also paramount (Baker & Riddick, 2013). Investment risk refers to the possibility you may need money investments, or the investments may not probably keep pace with price increases. Notably, all investments are exposed to ascertain the level of risk. However, the level of threat does vary depending on the kind of investment. Investments that carry higher levels of risks are those that have the potential to deliver high investment returns such as the example of growth assets. Investments
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