Question

Describe the general trade-off between risk and expected rate of return for a capital asset.

Answer 1

​​​​​​ANS :  if journal asset The expected Asset Pricing Model describes the relationship between systematic risk and expected return for particularly stocks.it was is widely used throughout finance for pricing risky securities and generating expected returns for assets given the risk of those assets and cost of capital. if The risk-return tradeoff states that the potential return rises with an increase in risk. Using the make of this principle, individuals associate low levels of uncertainty with low potential returns, and high levels of uncertainty or risk with high potential returns. According to the risk-return tradeoff, invested money can render higher profits. however The risk-return tradeoff is the trading principle that links high risk with high reward. The appropriate risk-return tradeoff depends on a variety of factors including an investor’s risk tolerance, the investor’s years to retirement and the potential to replace lost funds. Time also plays an essential role in determining a portfolio with the appropriate levels of risk and reward. For example, if an investor has the ability to invest in equities over the long term, that provides the investor