Thursday, June 25, 2015

In everyday terms

Risk-Return Tradeoff
The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with low potential returns, whereas high levels of uncertainty (high-risk) are associated with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if it is subject to the possibility of being lost.
Investopedia Explains:
Because of the risk-return tradeoff, you must be aware of your personal risk tolerance when choosing investments...

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