Explain the risk-return relationship, Financial Management

Assignment Help:

Explain the risk-return relationship.

The relationship among risk and required rate of return is known as the risk-return relationship.  It is a positive relationship for the reason that the more risk assumed, the higher the necessary rate of return most people will demand.

Risk aversion illustrates the positive risk-return relationship.  It describes why risky junk bonds hold a higher market interest rate than essentially risk-free U.S. Treasury bonds.

 

 


Related Discussions:- Explain the risk-return relationship

Beta value, Beta Value Risk is an important consideration while investi...

Beta Value Risk is an important consideration while investing in any security. It is the possibility that realised returns will be less than the returns expected. The degree, t

Calculate volatilities by using a risk free interest rate, 1. In this query...

1. In this query the implied volatilities are calculated by using a risk free interest rate of 2%. The computation are summarized by the following figure. 2. The computatio

What is meaning of perpetuity, What is meaning of Perpetuity If annuity...

What is meaning of Perpetuity If annuity is expected to go on forever then it is known as a perpetuity and then the above formula reduces to: Present value: A/i Perpetuit

Determine the factors of large organisations, Determine the factors of Larg...

Determine the factors of Large organisations -  Greater efficiency and productivity achieves economies of scale -  Easier to manage, organise and control workers through hie

Revenue recognition or realisation, Revenue Recognition or Realisation ...

Revenue Recognition or Realisation The resources of business are utilized to earn revenue through sale of goods or rendering of services.The American Accounting Association d

Define the meaning of objective - financial management, Define the meaning ...

Define the meaning of objective - financial management The term objectives offers a normative framework. That is the focus in financial literature is on what a firm must try to

Bond derivatives-callable bonds , Callable bonds give the right...

Callable bonds give the right to the issuer to redeem the bond prior to its maturity date, at a specified call price. These bonds are beneficial to the

Principle of opportunity cost, Suppose you have recently been contracted as...

Suppose you have recently been contracted as a financial consultant to a London-based engineering company, Alpha Products Plc. The company uses three components as part of their pr

What is percentage of sales method, Q. What is Percentage of Sales Method? ...

Q. What is Percentage of Sales Method? Percentage of Sales Method: - Under this process certain key ratios based on past year's information are established. These ratios is abl

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd