Relationship between Risk and Return

Relationship between Risk and Return

Relationship between Risk and Return

The relation between risk and return is an absolutely crucial component in all human decision making. Each investment a firm attempts, for demonstration, should offer a return that is not less than as high as the return on a likewise risky investment on economic markets. Otherwise shareholders would select to invest in the economic markets other than in the firm.

Market (Systematic) risk sways a large number of assets in the finances and is usually market wide. Uncertainties about the general finances, for example GDP, concern rates, ...