Discuss the risk/return tradeoff and how it relates to finance.

Discuss the risk/return tradeoff and how it relates to finance.

The Risk-Return Trade-Off states that investors demand a higher return for taking
on additional risk; This risk-return relationship will be a key concept as we value
stocks, bonds, and proposed new projects because in Finance we learn that the
higher the risk, the higher the return investors would require, and the lower the
price of stocks and bonds.

 

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