2019-02-14T07:20:12+00:00
Explain the Relationship Between Risk and Return
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Explain the Relationship Between Risk and Return: Identify Examples Instructions:
900 -word report, and include the following:Explain the relationship between risk and return Identify an example of risk and return. Explain which is more risky bonds or common stocks. Explain how understanding risk and return will help you in future business ventures The paper — including tables and graphs, headings, a title page, and a reference page — is consistent with APA formatting guidelines and meets course-level requirements. The paper includes properly cited intellectual property using APA style in-text citations and a reference page. The paper includes paragraph and sentence transitions that are logical and maintain flow throughout the paper. The paper includes sentences that are complete, clear, and concise. The paper follows proper rules of grammar and usage including spelling and punctuation.
Content:
Risk and Return Analysis Student Name Institution Risk and Return Analysis In the most fundamental sense, risk can be defined as the chance of financial loss. The definition of risk is less explored generally, and not everyone agrees on how to define it let alone measure it. Nonetheless, there are some attributes of risk that everyone subscribes to. An asset that has a higher chance of financial loss in the future is said to be riskier than that with lesser chances of financial loss. Formally, the word risk can be interchangeably used with uncertainty referring to the variability of return associated with a particular investment. For instance holding a government bond worth $1000 for a month that guarantees $100 bears no risk because of the absence of variability. On the contrary, holding a $1000 common investment stock carries significant risk because the variance in return ranges from $0 to $200. In simpler terms, the more nearly sure the return from an investment is the less variability and, therefore, lesser risk. Alternatively, an investment with a high variability bears greater risk due to its uncertainty in associated returns. It is essential to have knowledge of both sides of the coin as to what pertains return and its measurement. Return is defined as the total gain or loss experienced over an investment asset risk during a given period. In most occasions, return is given as cash distribution during the investment period plus the change in value. A...
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