Risk and return

Abstract

This chapter discusses the two most important attributes of the 7,200 securities quoted on the Stock Exchange — risk and return. When considering any security, the investor is always concerned with the return expected on the investment and the risk of the investment, that is, how likely it is that the return expected will be achieved. In a certain world, the return would always be exactly as expected and there would be no risk. The investor would merely have to compare the returns available on different investments and choose those which offered the highest returns.