Академический Документы
Профессиональный Документы
Культура Документы
11-3
RISK AND RETURN:
Risk means you have the possibility of losing some, or even all, of your original
investment.
In the investing world, risk is the chance that an investment's actual return will be
different than expected.
A common misconception is that higher risk equals greater return. The risk/return
tradeoff tells us that the higher risk gives us the Possibility of higher returns. There
are no guarantees. Just as risk means higher potential returns, it also means higher
potential losses.
Therefore, the investors calculate MARKET RISK PREMIUM which is the difference
between market return and return on risk-free bills.