Free The Meaning & Measurement of Risk and Return Dissertation Example

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Category: Finance
Subcategory: Investment
Level: College
Pages: 1
Words: 275
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Personal response to risk and return Risks occur due to the uncertainty and variability in the cash flows likely to be experienced in future. To obtain a great return, an investor has to put in place the various risks that are involved. Risk, therefore, is the future uncertainty that occurs due to the deviation that occurs from the expected outcomes or even earnings. The measurement of any return depends on the risks involved in any investment. Return involves the money that is made or even lost when an investment is carried out. According to Keown et al. (2014), a change in interest rate is accompanied by the change in risks involved which in turn affect the rate of the return. The measurement of both risk and return depends on the level of investment done by the investor. However, to reduce the number of risks involved in any investment, an investor needs to diversify his or her investments. This helps in spreading the risks and at the same time, reducing them thus earning much ...

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