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What is the relationship between risk and return in investment decisions?
The relationship between risk and return in investment decisions is that generally, higher returns are associated with higher levels of risk. Investors must weigh the potential for greater returns against the possibility of losing money when making investment decisions.
The equilibrium risk-return relationship for a risk-averse individual shows what?
The equilibrium risk-return relationship describes the investment/saving decision of a person based on risk versus return. Generally, a rational person maximises their outcome such that the last unit cost of a little more risk is equal to the incremental return on an investment. Since the cost of risk is an expectation due to uncertainty, different individuals value risk at different levels. A risk-adverse individual will choose a lower equilibrium value of investment/saving because their expected incremental costs from risk are higher than a less risk-adverse person.
What is the relationship of business profits and risk assumption?
mostv risk most profit
How does the risk or return ratio of a government bond compare with that of other types of investments?
The risk of a government bond is minimal, though the return from the government bond is very low compared to other lucrative bonds available in the market.When you opt for more return, there is more risk. Whereas though in government bond, the return is low, your investment is well secured and risk ratio is almost nil.
What happens when you get negative market returns can you use that to compute the required rate of return using CAPM?
A negative market return means that there has been a loss on investments because stocks have gone down. CAPM is a model that describes the relationship between risk and expected return and could be used to try to foresee negative market returns.
Relationship between risk and return?
risk is pre-stage for return...
The risk-return relationship for each financial asset is shown on?
the security market line
When it comes to investing what is the usual relationship between risk and reward?
When it comes to investing, one general relationship between risk and reward is that taking more risk is associated with a greater return. However, in many cases there is no relationship between the two. For example, even though stocks tend to have a higher return than bonds, taking that risk does not guarantee a better return.
The risk return relationship for each financial asset is shown on?
the security market line
What is the relationship between financial decision making and risk and return Would all financial managers view risk-return trade-offs similarly?
return is a reward gained from investing or the reward from employing assets in a company. risk is the degree of uncertainty of possible return generated from an investment
What is the relationship between risk and return in investment decisions?
The relationship between risk and return in investment decisions is that generally, higher returns are associated with higher levels of risk. Investors must weigh the potential for greater returns against the possibility of losing money when making investment decisions.
The equilibrium risk-return relationship for a risk-averse individual shows what?
The equilibrium risk-return relationship describes the investment/saving decision of a person based on risk versus return. Generally, a rational person maximises their outcome such that the last unit cost of a little more risk is equal to the incremental return on an investment. Since the cost of risk is an expectation due to uncertainty, different individuals value risk at different levels. A risk-adverse individual will choose a lower equilibrium value of investment/saving because their expected incremental costs from risk are higher than a less risk-adverse person.
What is the relationship between financial decision making and risk and return?
plz quote me the answer of the above question
Why CML is a special case of SML?
CML a special case of SML. While CML represents Return potential and risk involved in all financial asset across the Capital market, SML is the linear relationship between the expected return of security and its systematic risk, the expected return comparing a risk-free return plus a risk premium.
What are some questions that corporate strategists must answer?
The risk-return relationship for each financial asset is shown on
How do you calculate risk - free return?
Risk free rate of return or risk free return is calculated as the return on government securities of the same maturity.
Sharpex index model of optimum portfolio with examples?
The Sharpe Index Model, also known as the Capital Asset Pricing Model (CAPM), is used to find the optimal portfolio by balancing risk and return. It measures the excess return of a portfolio compared to a risk-free rate per unit of risk (beta). An example would be constructing a portfolio of diversified assets that maximizes return for a given level of risk, based on the relationship between the portfolio's expected return, the risk-free rate, and the market risk premium.
