risk versus reward

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.

risk versus reward

A financial analysis comparing the potential gains from a project or property against the potential losses.The greater the risk,the greater the reward should be.

References in periodicals archive ?
Ohio State Highway Patrol trooper Richard Reeder toldCleveland 19: "In any pursuit you have to weigh the risk versus reward when chasing a vehicle, and knowing that it was a 10-year-old child involved as a driver there's a big unknown there.
Propertyfinder pointed out that in the emirate, market forces present a neat risk versus reward synopsis.
David Parker, chief executive of Poly- math Consulting, which advises busi- nesses in the cards and payment in- dustry, explains that Western banks are simply undertaking a risk versus reward assessment.
To be clear, risk management is not the elimination of risk, but rather the responsible balancing of risk versus reward.
Commenting on the tournament, Andrew Squires, the general manager of Volkswagen Oman said, "The Volkswagen PowerPlay tournament is easily one of the most unique and technical golf tournaments in Oman; offering players a unique risk versus reward mechanism that adds a new layer of depth to the game.
Commenting on the tournament, Andrew Squires, the General Manager of Volkswagen Oman, said: "The Volkswagen PowerPlay tournament is easily one of the most unique and technical golf tournaments in Oman, offering players a unique risk versus reward mechanism that adds a new layer of depth to the game.
However, their numbers will continue to shrink as the risk versus reward no longer supports their model.
Of course, this is where the risk versus reward tradeoff comes in.
Hence, contractors and subcontractors should not forget to weigh risk versus reward before entering into commitments, as contracts create legally-enforceable obligations.
The conventional wisdom of managing income effectively, particularly among high net-worth individuals, as well as the issue of tactical investment allocation in terms of risk versus reward was also reiterated.
In their study, the researchers recommend that any potential entrepreneur keep the risk versus reward of any venture in mind, and evaluate the chances that their start-up may succeed.
Less than 20 percent are using big data analytics to identify information, predict hardware failures, ensure data integrity, or check data classification, despite the fact that by doing so, companies are able to improve their balance of risk versus reward and be in a better position to predict potential risks and incidents.