Reference no: EM132882764

Describe risk-return trade-off and why it is important to financial managers. Risk-return trade-off affects every person's life, not just financial managers. Discuss how you have reached a decision in your life using risk-return.

For instance, if a person resigns from a manufacturing company in Utah to work in a mining company in Nevada and then days before departure the company president offers an attractive promotion giving only 24 hours to get back with an answer.

Return: The job in Nevada comes with a larger salary, the potential for upward mobility and would advance career development,

Risk: Uprooting family and moving to an unfamiliar location 250 miles away. This would mean children attending new schools, making new friends and distancing from family. And what if the new job in Nevada didn't pan out?

Should this person stay and take the promotion or move and uproot family?

We do go through this cost-benefit analysis before making purchases and decisions in our lives. We just may not write out our cost-benefit analysis.