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

What difference does it make ordinary annuities, If you are doing PVA and F...

If you are doing PVA and FVA problems, what difference does it make if the annuities are "ordinary annuities" or "annuities due"? In PVA or a FVA of annuity due trouble, annuit

Problem in the determine of cost of the capital, Q. Problem in the determin...

Q. Problem in the determine of cost of the capital? Conceptual controversies regarding the relationship between the cost of the capital and the capital structure: different the

Share price movements, The management of Nelson plc wish to estimate their ...

The management of Nelson plc wish to estimate their firm's equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

Market, On January 1 a bond with face value of $1,000 is for sale in the ma...

On January 1 a bond with face value of $1,000 is for sale in the market.  That bond has a coupon rate of 6%, pays interest only once a year and the end of the year, and matures at

Define the p/e valuation method, Define the P/E valuation method. Under wha...

Define the P/E valuation method. Under what circumstances should a stock be valued using this method? The P/E ratio specifies how much investors are willing to pay for each dol

Accounting framework - convention of conservation, Accounting Framework - C...

Accounting Framework - Convention of Conservation Conservatism refers to the principle and practices that are established through way of tradition, reluctance to change from e

What is a security?, What is a security? The Securities are claims on f...

What is a security? The Securities are claims on financial assets.  They can be explained as "claim checks" that give their owners the right to obtain funds in the future.  Sec

Global economy, Global Economy: The size of the world stock market grew...

Global Economy: The size of the world stock market grew steadily in the 1970s and 1980s and crossed the $12 trillion figure in 1993. The share of the US market decreased tremen

Residual income, Residual Income This is used for external reporting pu...

Residual Income This is used for external reporting purposes. This term refers to the net income which is available for distribution to the firm's common stock holders. In mana

Award and signing of contract, A w ard of contract In previous sub se...

A w ard of contract In previous sub section you learnt in what situations you can negotiate. Now let us discuss the procedure for awarding the contract. Below are the step

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