Examples of direct relationship between risk and return

What Is Risk and Return? - AOL Finance

examples of direct relationship between risk and return

The relationship between risk and return is often represented by a trade-off. You can do that by spreading your money around -- for example. c. give examples of the direct relationship between risk and return Risk = good or bad outcomes. The greater the risk usually requires a promise of a greater. It is also direct relationship between risk and return. If investor decreases For example, Govt. of India need money. Because, govt. needs this.

Infrastructure Infrastructure comprises physical assets and related operations providing businesses and society with essential services that facilitate many important activities and are diversified across a range of sectors including: Unlisted infrastructure investments potentially provide investors with stable, long-term capital growth and cash distributions.

The infrastructure portfolio is comprised of a range of investments, some of which are managed directly by UniSuper and others that are managed by external fund managers. Private equity The private equity portfolio comprises investments in unlisted companies held through a number of Australian and international private equity funds.

Investments are diversified across a broad range of sectors including: UniSuper generally holds these investments through underlying private equity funds as a limited partner. Property Property investments are investments in land and the facilities on it. They fall in to two categories - unlisted property and listed property. Unlisted property Unlisted property typically comprises investments in high-quality, professionally managed retail, office or industrial real estate with a focus on producing returns from both rental income and capital growth.

Over the long term, property returns are potentially higher than fixed interest or cash, but less than shares. Rental income is generally a significant component of property returns, which tends to enhance the stability of returns.

The risk-return relationship | Understanding risk | relax-sakura.info

As property is a real asset, it has inherent inflation protection characteristics. In an investment portfolio, property can diversify investment risk due to its low correlation to other asset classes, such as shares and fixed interest. Listed property Like unlisted property, listed property allows investors to purchase interests in a diversified and professionally managed portfolio of real estate across the commercial, industrial and retail sectors, with a focus on producing returns from both rental income and capital growth.

Our listed property investments are investments in property trusts, which are listed on a publicly traded stock exchange. As such, pricing is based on market movements as interests are listed and traded on stock markets, as opposed to underlying asset valuations.

  • What Is Risk and Return?
  • Asset classes explained
  • Relationship between Risk and Return

Cash Cash investments include money in bank deposits or in short-term money market securities. The investment returns largely come from interest paid on the amount invested as well as any increase, or decrease, in the case of negative returns, in the value of the underlying securities due to changing interest rates.

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Short-term money market securities are different from bank deposits and can increase or decrease in value. Fixed interest Fixed-interest investments include securities such as bonds and debentures. Stocks have a potentially higher return than bonds over the long termTerm The period of time that a contract covers.

Also, the period of time that an investment pays a set rate of interest. BondBond A kind of loan you make to the government or a company.

examples of direct relationship between risk and return

They use the money to run their operations. In turn, you get back a set amount of interest once or twice a year. If you hold bonds until the maturity date, you will get all your money back as well.

As a shareholderShareholder A person or organization that owns shares in a corporation. May also be called a investor.

examples of direct relationship between risk and return

But if the company is successful, you could see higher dividends and a rising shareShare A piece of ownership in a company. But it does let you get a share of profits if the company pays dividends.

Some investments, such as those sold on the exempt market are highly speculative and very risky. They should only be purchased by investors who can afford to lose all of the money they have invested.

examples of direct relationship between risk and return

DiversificationDiversification A way of spreading investment risk by by choosing a mix of investments. The idea is that some investments will do well at times when others are not.

Return on Assets & ROA Formula

May include stocks, bonds and mutual funds. The equity premium Treasury bills issued by the Canadian government are so safe that they are considered to be virtually risk-free. The government is unlikely to default on its debtDebt Money that you have borrowed.