isk and Return: Introduction isk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will ccur, and there is a trade-off between risk and return. The higher an investment's risk, the-Select-the return required to duce investors to purchase the asset. This relationship between risk and return indicates that investors are risk -Select- ✓; investors dislike risk and require-Select- rates of return as an inducement to buy riskier securities. A -Select- represents the additional compensation investors require for bearing risk; it is the difference betwee he expected rate of return on a given risky asset and that on a less risky asset. An asset's risk can be considered in two ways: On a stand-alone basis and in a portfolio context.
isk and Return: Introduction isk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will ccur, and there is a trade-off between risk and return. The higher an investment's risk, the-Select-the return required to duce investors to purchase the asset. This relationship between risk and return indicates that investors are risk -Select- ✓; investors dislike risk and require-Select- rates of return as an inducement to buy riskier securities. A -Select- represents the additional compensation investors require for bearing risk; it is the difference betwee he expected rate of return on a given risky asset and that on a less risky asset. An asset's risk can be considered in two ways: On a stand-alone basis and in a portfolio context.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Risk and Return: Introduction
Risk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will
occur, and there is a trade-off between risk and return. The higher an investment's risk, the-Select-the return required to
induce investors to purchase the asset. This relationship between risk and return indicates that investors are risk
; investors dislike risk and require -Select- Vrates of return as an inducement to buy riskier securities. A
represents the additional compensation investors require for bearing risk; it is the difference betweer
the expected rate of return on a given risky asset and that on a less risky asset. An asset's risk can be considered in two ways:
On a stand-alone basis and in a portfolio context.
-Select-
-Select-
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