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 ?
You have to determine what choices you have, assess risk versus reward, check in with how confident you are with those choices, and then make a decision that weighs probability and circumstance.
Often, the risk versus reward ratio is not attractive, says Lumijrvi, because lets face it, growth companies would much rather invest in one market entry and tackle just one set of challenges, which means theyre more likely to choose a larger and more developed country with a larger potential.
"For me, it was a risk versus reward situation in the last couple of laps.
"We are trying to play differently, we are playing out with the ball, it's risk versus reward, and our decision making was poor for the next two goals "We are not going to rip everything up and say that's not the way we are going to play.
For thieves, it's all about risk versus reward - if the reward looks likely to exceed the risk, they are going to target that home.
Asset allocation is an investment strategy that aims to balance the risk versus reward by adjusting the percentages of asset classes in your investment portfolio.
Asset allocation is defined as the implementation of an investment strategy that attempts to balance risk versus reward. It does this by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals, investment time frame and the expected future performance of each asset class.
Walsh is unsure how many rides he will take before the Festival."It's risk versus reward," he added.
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. In order to effectively manage compliance risk, credit unions must conduct compliance risk assessments on their products, services, operations and the regulatory impact on such.