Table of Contents
Which of the following types of investment is the safest but normally has the lowest rate of return?
Savings, CDs, Money Market Accounts, and Bonds Some that are considered the safest also generate the least interest (or returns). The investment type that typically carries the least risk is a savings account. CDs, bonds, and money market accounts could be grouped in as the least risky investment types around.
What is the relationship between risk and return?
A positive correlation exists between risk and return: the greater the risk, the higher the potential for profit or loss. Using the risk-reward tradeoff principle, low levels of uncertainty (risk) are associated with low returns and high levels of uncertainty with high returns.
What is risk types of risk?
Types of Risk Broadly speaking, there are two main categories of risk: systematic and unsystematic. Systematic Risk – The overall impact of the market. Unsystematic Risk – Asset-specific or company-specific uncertainty. Political/Regulatory Risk – The impact of political decisions and changes in regulation.
The risk-return relationship. Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk.
What is risk and return of a single asset?
Section # 1. Risk and Return of a Single Asset: Return from a venture is concerned with benefit from that venture. In the field of finance in general and security analysis in particular, the term return is almost invariably associated with a percentage, and not a mere amount.
What is the degree of risk associated with an investment?
Risk is associated with the possibility of not realizing return or realizing less return than expected. The degree of risk varies on the basis of the features of the assets, investment instruments, the mode of investment, the issuer of securities etc. Even the so called risks less assets like bank deposits carry some element of risk.
What is return from a venture?
Return from a venture is concerned with benefit from that venture. In the field of finance in general and security analysis in particular, the term return is almost invariably associated with a percentage, and not a mere amount.