The Relationship between Risks and Rate of Returns
The risk and rate of return, as discussed in business, are directly proportional. It means that as the risk increases, the rate of return increases while as the risk declines, the rate of return decreases as well (Christoffersen, 2012). Therefore, an individual willing to invest must take a decision based on both the risk and rate of return analysis to achieve a high return at a lower risk. Investors are likely to prefer investment decisions that yield high rates of return at minimal risks. The term risk defines the capability of acquiring loss below a person’s investigations. On ...
