Risk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will occur, and there is a trade-off between risk and return. The higher an investment's risk, the between risk and return indicates that investors are risk the return required to induce investors to purchase the asset. This relationship buy riskier securities. A ; investors dislike risk and require rates of return as an inducement to expected rate of return on a given risky asset and that on a less risky asset. An asset's risk can be considered in two ways: On a stand-alone basis and in a portfolio context