q2- Which of the following statements is correct? Select one: a. Only risk averse investors would prefer the maximum return for a given level of risk. b. All investors would prefer the minimum risk for a given level of return. c. All investors would refer the maximum level of return for a given level of risk. d. None of the above.
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
q2- Which of the following statements is correct?
Only risk averse investors would prefer the maximum return for a given level of risk.
All investors would prefer the minimum risk for a given level of return.
All investors would refer the maximum level of return for a given level of risk.
None of the above.
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