clarkkent, page-107

  1. 10,614 Posts.
    lightbulb Created with Sketch. 147
    "still curious why you think risk/return is related btw since its been disproved using beta as the measure of risk"


    Why are you asking me basic questions ?
    If you are in cash, you get a 'safe' return with no risk.
    If you are in short-term treasuries you get a low return with minimal risk.
    If you invest in bonds you get a higher return but with greater volatility, interest rate risk ans sometimes default risk.
    If you invest in equities, your returns are more volatile and riskier, therefore you demand a higher return premium, ie your expected return will be higher.
    If you invest in an oil exploration company, you have a big chance of going bust and a small chance of making a killing. You demand an even higher expected return.
    You wouldn't invest in an oil exploration company if your expected return was 5%, would you. You would choose a term deposit.


    .
 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.