The relationship between risk and return is an important concept as it has numerous implications for both corporate managers and investors. Corporate managers assess the risk and return of new projects or investments. Investors assess the risk and return of financial assets before making investment decisions.

Discussion Questions:

1. Explain the risk and return trade-off.

2. Describe the differences between systematic risk and unsystematic risk.

3. Provide examples of systematic risk and unsystematic risk.

   1. How both risks are measured?

   2. Which risk is more relevant? Why?