This week, letâ€™s talk about investments and investment risk. In class with you today are individuals with various experience in investing â€“ some may be seasoned professionals, while others may have very little experience. Either case is perfect okay because we all approach investing, risk, and return differently.,This week, letâ€™s talk about investments and investment risk,Week 4 Discussion: Risk, Return and Diversification, This week, letâ€™s talk about investments and investment risk. In class with you today are individuals with various experience in investing. Some may be season ed professionals, while others may have very little experience. Either case is perfect okay because we all approach investing, risk, and return differently., When you invest your money, you have to consider a basic risk-return tradeoff. The risk-return tradeoff (Links to an external site.) is the balance between the desire for the lowest possible risk and the highest possible returns. In general, low levels of uncertainty (low risk) are associate with low potential returns and high levels of uncertainty (high risk) are associated with high potential returns (link (Links to an external site.)).,Describe three factors that influence your evaluation of the risk of an investment, What factors influence risk tolerance?, How does diversification ,positively and negatively affect, risk?, What type of investor would invest in a high beta stock and a low beta stock?,More details;,TheÂ risk-returnÂ relationship. Generally, the higher the potentialÂ returnÂ of an investment, the higher theÂ risk. There is no guarantee that you will actually get a higherÂ returnÂ by accepting moreÂ risk.Â DiversificationÂ enables you to reduce theÂ riskÂ of your portfolio without sacrificing potentialÂ returns.,Diversification reduces risk by investing in investments that span different financial instruments, industries, and other categories.,Risk can be both undiversifiable or systemic, and diversifiable or unsystemic.,Investors may find balancing a diversified portfolio complicated and expensive, and it may come with lower rewards because the risk is mitigated.,Attachments,Click Here To Download,
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