Essay on Thompson Asset Management

The lower the risk that is associated with an investment, that investment usually has a potential for lower returns. Conversely, if there are high levels of risk associated with an investment, and in turn a potential for a higher return.

-All these factors matter when choosing an investment alternative. Because you want to make sure theres safety (minimal risk of loss) in the investment. there are many different risk such as inflation risk, interest

With attention to the previous information given, the principle of risk-return tradeoff is based on the thought that individuals are opposed to taking risk, meaning individuals would prefer to get a certain return on their investment rather than risking and getting an uncertain return. (Titman, Keown, & Martin, 2014) This principle tells us that investors will receive higher returns for taking on a bigger risk however; a challenge often seen in investors is how to calculate the tradeoff between risks and return with riskier investments. A higher expected rate of return is not always a higher actual return.

magnitude of these risks, this paper advocates for a more proactive solution. Active investing in

An investment philosophy is one’s approach to tolerance for risk in investments. It may be conservative which means you accept very little risk and are generally rewarded with relatively low rates of return. Another investment philosophy is moderate also known as risk indifference, this means one accepts some risk as they seek capital gains through slow and steady growth. Lastly, one may have an aggressive investment philosophy or be more of a risker seeker. Often times, people strive for a very high return by accepting a high level of risk. Going into the game, we were informed that like

50) __________ says to seek out investments that offer the greatest expected risk-adjusted real return.

De minimis risk is defined as the incremental risk produced that is sufficiently small that there is no incentive to modify the activity (Asante-Duah, 2002).

Return on investment - The ratio of money gained or lost on an investment relative to the amount of money

The tighter the probability distribution of its expected future returns, the greater the risk of a given investment as measured by its standard deviation.

Showing passion and interest for safety. Risk management does not mean do thing conservative. We should keep our passion to catch any opportunity to enlarge our profits, but we have to consider the downside for different potential loss due to the uncertain risk

An investor would invest in a security for the return. However that return comes with a premium, the Risk. The higher the risk an investor is willing to take the higher the returns would

Although investing requires the individual to bear risk, the risk can be controlled through the construction of diversified portfolios and by excluding any portfolio that offers an inferior return for a given amount of risk. While this concept seems obvious, one of your clients,

In summary, many people have called the risk/return tradeoff the equivalent of financial skydiving (Investopedia, 2011).

In their research study, Souder & Myles (2010) identify that risk is chiefly fundamental to investing. Böhringer & Löschel (2008) further add that there is no discussion of returns or performance that is deemed meaningful in the absence of at least some mention of the involved risk. However, the trouble for investors, who have just entered into the marketplace, involves the process of figuring where risk really lies, as well as what the difference between the various levels of risks. Relating to the manner, in which risk is fundamental to investments, a significant number of new

Finally, when the expected return up to 10 percent, it will result an undiversified and higher risk portfolio whereby dependent based on the higher risk financial assets.