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 retum. The higher an investment's risk, the $-$salect$-$ the return required to induce investors to purchase the asset. This relationshlp between risk and return indicates that Investors are risk $$ ; Investors dislike risk and require $$ rates of retum as an Inducement to Answerad $/$ iskler securties$.$ A $[q,$ represents the additional compensation investors require for bearing risk; it is the difference between the 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 basls and in a portfollo context.