risk and return Instructions The return that investors require for an investment depends on the risk associated with that investment. This is one of the fundamental relationships of finance.

Due to the differences in risk tolerance levels among the different groups of investors, some demand a higher return as compensation for the risk assumed, others demand a high return regardless of the associated risk they may face, and others have a high risk tolerance. and they even prefer the greater risk regardless of the return it generates.

Discuss what is the relationship between risk and return. Discuss what type of risk preference could add the greatest possible value to an investment.

When presenting your answer, you must:

Define the concepts of risk and return. Describe and analyze the three types of risk preferences and their impact on investment returns. Indicate how the financial manager measures risk and return.