MANAGEMENT

Detailed explanation-1: -The risk-return tradeoff is an investment principle that indicates that the higher the risk, the higher the potential reward. To calculate an appropriate risk-return tradeoff, investors must consider many factors, including overall risk tolerance, the potential to replace lost funds and more.

Detailed explanation-2: -First is the principle that risk and return are directly related. The greater the risk that an investment may lose money, the greater its potential for providing a substantial return. By the same token, the smaller the risk an investment poses, the smaller the potential return it will provide.

Detailed explanation-3: -Risk and return are positively related. The higher the risk the higher the return. Different finance managers will have different appetite for risk. Some will be risk takers, others will be risk averse while others will be risk neutral.

Detailed explanation-4: -Risk takes into account that your investment could suffer a loss, while return is the amount of money that you can make above your initial investment. In an efficient marketplace, a higher risk investment will need to offer greater returns to offset the chances of loss.

Detailed explanation-5: -The term return refers to income from a security after a. defined period either in the form of interest, dividend, or market appreciation in security. value. On the other hand, risk refers to uncertainty over the future to get this return. In simple words, it is a probability of getting return on security.