Explain the risk–return relationship, Financial Management

Assignment Help:

Explain the risk–return relationship

The relationship among the risk and required rate of return is termed as the risk–return relationship. It is a positive relationship since the more risk assumed, the higher the needed rate of return most people will demand.

Risk aversion describes the positive risk–return relationship. It describes why risky junk bonds carry a higher market interest rate as compared to essentially risk-free U.S. Treasury bonds.

Related Discussions:- Explain the risk–return relationship

Establish ground rules for the study and design phases, Question : One ...

Question : One activity of the study phase is: "Establish Ground Rules for the Study and Design Phases". (a) What are ground rules? (b) When developing ground rules for a

Tax-backed debt, An analyst should first examine the issuers ...

An analyst should first examine the issuers debt structure in order to analyze the tax-backed debts. The debt burden consists of respective direct a

Calculation of variances, a) Distinguish among standard costing and budgeta...

a) Distinguish among standard costing and budgetary control. (b)"Calculation of variances in standard costing is not an end in itself, but a means to an end" Brief discussion

Baumol Model , Explain the Baumol Model

Explain the Baumol Model

What can financial institution often do for deficit econmic, What can a fin...

What can a financial institution often do for a deficit economic unit (DEU) that it would have difficulty doing for itself if the DEU were to deal directly with an SEU? SEUs us

Statement of total comprehensive income, At 31 July 2010 this instrument me...

At 31 July 2010 this instrument meets the definition of a derivative: Small or no initial investment. Its value is dependent on an underlying economic item; exchange ra

Define how the market determine the fair value of a bond, How does the mark...

How does the market determine the fair value of a bond? The bond’s fair value is the present value of the bond's coupon interest payments plus the present value of the face value

Expalin purchase outright and leaminger plc, LEAMINGER PLC (a) Purchas...

LEAMINGER PLC (a) Purchase outright (2) Balancing allowance Tax effect = 93,906 × 30% = 28,172 Finance lease Annuity Factor (AF) at 10% for 4 year

Determine the expected return, Question : (a) Lucky Corporation is cons...

Question : (a) Lucky Corporation is considering an investment in one of the two mutually exclusive proposals: Project A which involves an initial outlay of Rs 170,000 and Proj

Caselets, How would you judge the potential profit of Bajaj Electronics on ...

How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit.

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages