WebInvesting in higher-return assets means you’re accepting the higher risk that goes along with them. One way of looking at the potential for a higher return is that it is ‘compensation’ for bearing the extra risk. WebHigher levels of return are required to compensate for increased levels of risk. In other words, the higher the risk undertaken, the more ample the return - and conversely, the lower the risk, the more modest the return. This risk and return tradeoff is also known as the risk-return spectrum.

Is there a positive correlation between risk and return?

Web30 de mar. de 2012 · Because the market generally trends upward, this stock has a higher expected return. A stock with a beta of only 0.5 will be less volatile but also have a lower expected return. Individual... Web14 de jul. de 2024 · Terms apply to offers listed on this page. Standard deviation is a measure of how much an asset's return varies from its average return over a set period of time. Standard deviation is a commonly ... first sting

Risk and Return - Econlib

Web30 de ago. de 2024 · The math is simple: If you can confidently validate your idea and vehemently take it in the right direction, the higher your chances are to succeed, even though the idea is risky. Becoming... WebLet's run through a few examples of risk and return. Imagine there are two possible bonds you want to invest in: Bond X and Bond Z. And let's say that Bond X has a 15% chance of non-payment and Bond X has a 45% chance of failure (loss). In the absence of any further data, you are of course more likely to select Bond A since it provides you with ... Web1. Explain the statement ―the higher the risk, the higher the return. The expected return from investment is connected to the risk tolerance of the investors. There are … first stitches pueblo co