What are some important concepts for individual investors to consider when

What are some important concepts for individual investors to consider when

Category:
June 24, 2021
8 Views
0
0

What are some important concepts for individual investors to consider when evaluating the risk and returns of various investments?

Answer and ExplanationSolution by a verified expert

Explanation
Investors need to consider a number of important concepts concerning risk and return. To expect higher returns, investors must be willing to take on higher risk and accept higher volatility in returns from period to period. To mitigate the overall risk in a portfolio of higher risk securities, investors can diversify into non or negatively-correlated securities. Investors should also appreciate the different types of external risks to securities, including market risk, interest rate risk, and inflation risk. In addition, they should also recognize that actual performance is never guaranteed and that it will vary over time.

Verified Answer
Investors should consider the following concepts when evaluating risk and return of various investments:

1. The relationship between risk and return

2. The effect of diversification on portfolio risk.

3. The difference between required, expected, and actual returns

4. The effect of time frame on risk.

5. All the different types of risk that may affect an investment.

Purchase this answer to view it.
Click the button to login/signup and buy full solution at 2 USD only.

The Best Research Paper Writing Service

Would you want to pay someone to write your paper professionally from scratch? 100% Original and 0% AI Content!.

🎓 Write my Essay
📚 Write my Persuasive Essay
📋 Humanize AI Content for Turnitin
💻 Write my Reflective Essay
📑 Write my Research Paper
📜 Write my Thesis Paper
📘 Write my Dissertation
📋 Write my Case Study
📝 Write my Online Exam
✒️ Write my Term Paper
Write my Paper