This article throws light upon the top four methods of measurement of risk. The methods are: 1. Range Analysis 2. Probability Distribution 3. Standard Deviation 4. Coefficient of Variation. Method # 1. Range Analysis: Where different returns from an asset are possible under different circumstances, more than one forecast of the future returns may be made. These returns may be [...]
After reading this article you will learn about the relationship between Risk and Return. The entire concept of security analysis is built on two concepts of security: return and risk. To earn return on investment, investment has to be made for some period which in turn implies passage of time. Dealing with the return to be achieved requires estimate of [...]
After reading this article you will learn about the relationship between Risk and Expected Return. There is a positive relationship between the amount of risk assumed and the amount of expected return. Greater the risk, the larger the expected return and the larger the chances of substantial loss. Investments which carry low risks such as high grade bonds will offer [...]