Assignment 1: Risk & Return

Assignment 1: Risk & Return

Yes, there can a return without risk i.e. risk-free rate of return, however, certain operational or economic risks (risks other than financial risk) can be involved. But there is a relation between risk and return: with an increased risk; potential return rises, and with a low level of risk (uncertainty); low potential returns are earned (Tuller, 1994).

Yes, large risk investments guarantee large returns, since they are highly risky; they have to provide large returns to attract individuals. Thus, large return is provided to compensate for the additional risk. However, some investors say that ...