Risk and Return Relationship Essay Example | Topics and Well Written Essays - 750 words

bump and Return Relationship - Essay ExampleThe essay find and Return Relationship talks roughly the characteristics that can influence take a chance as the probability of losing anything of value or uncertainty of a result. This topic also analyzes the insecurity and return relationship which is fundamental to the potential investment decisions. The risk is an outcome of those actions which be taken regardless of uncertainty. The characteristics that can control or influence risks are as follows exploitation debt Using debt in the business increases the chances of risk bear by shareholders, but it also results in the higher consider of returns. Optimal roof structure Making use of optimal or most favorable capital structure balances the pressure or influence of risk and maximizes the stock price of the company.Aggressive management Risk can be influenced by the aggressive management. The aggressive managers of the firm are more prone to engage debt in order to increase pro fit.The relationship between risk and return is fundamental to the investment decisions, whether assessing a sole investment or selecting between different investments. Potential investors evaluate the relationship between risk and return when they have to make a decision regarding investment in securities like bonds or shares. It has been find that there is a positive connection between the risk and return. The securities which are riskier provide a greater return. However, Bowman found that there is a distinct and significant negative relationship between risk and return.