--%>

Explain the concept of the risk–return relationship.

Explain the concept of the risk–return relationship.

E

Expert

Verified

The relationship between required return rate and risk is identified as the risk–return relationship. This is a kind of positive relationship since the additional risk involved; most people will demand higher the required return rate.
Risk aversion describes the positive risk–return relationship. It also defines why risky junk bonds have a higher market interest rate than the risk-free U.S. Treasury bonds.

   Related Questions in Financial Management

  • Q : How must you hedge discretely How must

    How must you hedge discretely?

  • Q : Determine the corresponding bid-ask

    Normal 0 false false

  • Q : Who explain that price options

    Who had shown how to price options specified through simulations?

  • Q : Calculate annual mortgage payment

    Question 1 You just took out a variable-rate mortgage on your new home. The mortgage value is $100,000, the term is 30 years, and initially the interest rate is 8%. The interest rate is fixed for

  • Q : Managerial |Accounting help Janice

    Janice Colangelo heads the Training Centre of the large HR Consulting firm EMT Consulting. The firm has three major departments: Recruitment, Training and Career Services. The Training Centre provides management training for employees of various businesses. Recruitment provides recruitment service

  • Q : How a firm can estimate the optimal

    A corporation can have too much working capital. Explain. Explain how can a firm estimate the optimal level of current assets.

  • Q : Question on nominal rate Suppose a

    Suppose a currency swap wherein two counterparties of comparable credit risk each borrow at the best rate obtainable, yet the nominal rate of one counterparty is greater than the other. After the primary principal exchange, is the counterparty i.e. required t

  • Q : Explain implied volatility verses

    Explain implied volatility verses strike with a graph.

  • Q : Define pricing of options to simulation

    Who gave the pricing of options to the simulation of random asset paths?

  • Q : Closed-end country funds trade at

    Why do you think closed-end country funds frequently trade at a premium or discount?CECFs trade at premium or discount since capital markets of the home & host countries are segmented, preventing cross-border arbitrage. If cross-border arbit