Analysis of Stock-Market Securities

Abstract

The essential objective of investment is to maximise returns while minimising risk. However, investments giving high returns will tend to incur high risk, whilst low-risk investments will tend to give relatively low returns. Thus the investor must compromise. Investors with a high level of ‘risk aversion’ will seek low-risk investments and will be forced to accept a relatively low return, whereas those with less aversion to risk will tend to seek the higher returns available from higher-risk investments.