Risk-Return Tradeoff

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Risk-return tradeoff

The basic concept that higher expected returns accompany greater risk, and vice versa.

Risk-Return Trade-Off

The concept that every rational investor, at a given level of risk, will accept only the largest expected return. That is, given two investments at the exact same level of risk, all other things being equal, every rational investor will invest in the one that offers the higher return. The risk-return tradeoff is pervasive throughout economics and finance. It is the reason that riskier bonds pay higher coupons than other bonds. It is also the reason that bonds pay lower returns than most stocks because they are a less risky investment. The Markowitz Portfolio Theory attempts to mathematically identify the portfolio with the highest return at each level of risk. See also: Markowitz Efficient Portfolio.

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risk versus reward Risk-Return Trade-Off			In a recent paper, Ghysels, Santa-Clara, and Valkanov (2005) find that what matters for the tests of the risk-return tradeoff is the persistence of the conditional variance process. The dynamic relation between returns and idiosyncratic volatility by Jiang, Xiaoquan; Lee, Bong-Soo / Financial Management But this approach has the biggest risk-return tradeoff, is the most expensive, requires redoing customized functionality and rebuilding custom integrations, and has the longest completion time. Enhancing your core LOS: rip-and-replace, reface or remodel? by Focardi, Craig / Mortgage Banking Viceira Risk-Return Tradeoff 11120 Alfonso Gambardella Proprietary vs. NBER Working Papers on-line by NBER Reporter			Risk Profile Risk Ratio Risk Reversal Risk seeker Risk Taker Risk Tolerance Risk Transfer risk versus reward Risk-Adjusted Discount Rate Risk-Adjusted Performance Risk-adjusted profitability Risk-Adjusted Return Risk-Averse Risk-based capital ratio risk-based capital requirement Risk-Free Risk-Free Asset Risk-Free Interest Rate risk-free rate Risk-Free Rate of Return Risk-Free Return Risk-Loving Risk-Neutral Risk-Prone Risk-Return Trade-Off Risk-Return Tradeoff Risk-Reward Ratio Risk-Weighted Assets Riskless Arbitrage Riskless Investment Riskless or Risk-Free Asset Riskless Rate Riskless rate of return Riskless Transaction Risks and Opportunities Risky Asset Risky Operation Risparmiare Risque d'insolvabilite Risque de change Risque de penurie Risque de ralentissement Risque exterieur Risque-Pays Risultato finale Ritenuta alla fonte Ritenuta d'acconto Ritirare i titoli Riyal RMBS RO			Risk-Free Rates Risk-Free Rates of Return Risk-free return Risk-Free Returns Risk-Free Securities Risk-Free Security Risk-Free Transaction Risk-Free Transactions Risk-Informed Risk-Informed Inservice Inspection Risk-Informed Licensing Panel Risk-Informed Regulation Implementation Plan Risk-Informed, Performance-Based Regulation Risk-loving Risk-Need-Responsivity Risk-neutral Risk-Neutral Valuation Relationship Risk-prone Risk-Reducing Salpingo Oophorectomy Risk-Reduction Mastectomy Risk-Related Medical History Risk-return spectrum Risk-return trade-off Risk-Return Trade-Offs Risk-Return Tradeoff Risk-Return Tradeoffs Risk-Reward Basis risk-reward ratio Risk-Reward Ratios Risk-Screening Environmental Indicators Risk-Seeking risk-sharing hypothesis Risk-Standardized Mortality Rate risk-taker Risk-taking Risk-taking Risk-taking Risk-taking Risk-taking Risk-to-Reward Risk-tolerant Risk-tolerant Risk-Weighted Asset Risk-Weighted Assets Risk-Weighted Assets Risk-Weighted Capital Risk-Weighted Capital Ratio Risk/Reward Basis Risk/Reward Trade-Off Risk/Reward Trade-Offs Risk/Reward Tradeoff Risk/Reward Tradeoffs Risk/Value Assessment Model risked risked

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