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

What is redeemable debt, What is Redeemable debt Company will have to...

What is Redeemable debt Company will have to re-pay the debt at redemption date or between the two redemption dates (i.e. 20X5/20X9, means debt can be redeemed any time betwe

#WALTOR''S MODEL., CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME...

CAPITALISATION RATE=0.01 EARNINGS PER SHARE(E)=10 ASSUME RATE OF RETURNS ON INVESTMENTS (R):15

Balance sheet, Balance Sheet: The balance sheet measures the financial ...

Balance Sheet: The balance sheet measures the financial position of the business at a particular point in time.  It is also called Statement of Financial Position. The balan

Push strategy, Push Strategy This is referred for marketing approa...

Push Strategy This is referred for marketing approach in which a manufacturer uses its sales force and trade promotions to sell a product actively to retailers and wholesa

Compounding or future value concept, Compounding or Future Value Concept: -...

Compounding or Future Value Concept: - Under this process of compounding the future worth of all cash inflows at the end of the time horizon at a particular rate of interest are fo

Explain about the primary and secondary markets, Explain about the primary ...

Explain about the primary and secondary markets. Primary and secondary markets: A primary market is a financial market wherein new matters of financial securities (both s

91-day t-bills, 91-Day T-Bills Starting from July, 1965, 91-day T-bills...

91-Day T-Bills Starting from July, 1965, 91-day T-bills were issued at a discount rate ranging from 2.5-4.6 percent per annum. Till July, 1974, the discount rate was 4.6 percen

Determine the key points in the turnbull report, Key points in the Turnbull...

Key points in the Turnbull Report: Have a defined process for review of effectiveness of internal control. Review regular reports on internal control. Consider key

Cash budget, We need to have done some exploration work on all of the major...

We need to have done some exploration work on all of the major projects for inclusion in our prospectus, but of our $4m we need at least $1m in the bank to pay for all the listing

Explain why warrants are rarely exercised, Explain why warrants are rarely ...

Explain why warrants are rarely exercised unless the time to maturity is small? Warrants are hardly ever exercised until the time to expiration is small because the market pric

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