Risk-return trade-off

(redirected from Risk vs. Reward)
Also found in: Acronyms.

Risk-return trade-off

The tendency for potential risk to vary directly with potential return, so that the more risk involved, the greater the potential return, 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.
References in periodicals archive ?
The cloud represents a major change in how computing resources are utilized, so it's not surprising that IT professionals have concerns about risk vs.
This way we can determine appropriate asset management, helping each client determine their risk vs.
QUALITATIVE MATRICES - Two commonly used qualitative matrices with detailed descriptions -QUANTITATIVE MATRICES - Risk vs Reward Matrix - Risk vs.
The analysis includes a series of colorful charts designed to help explain or review fundamental investment concepts, such as asset allocation, risk vs.
We believe University Planet's APS offers great promise, and is very attractive in terms of risk vs.
A full explanation of asset allocation techniques used by bankers, insurance executives and pension fund managers to determine the risk vs.