whats mean by trade-off risk and return ????

Answer 1

it means it is another scenario for your risk and return

Answer 2

I think this question may be best answered when it's put into a context.
In business management practice, trade off is an opportunity cost from a business decision. In other words, when you make a business decision, you may have foregone other valuable benefits, or you may have created some potential to cost you more in other areas.
In finance terms, trade off risk applies to a fiancing choice. When you make an investment, the trade off risk refers to market interest rate. Interest rates ultimately cost you money, and how high of the costs depends on how high the interest is.
I assume the return refers to investment return. Again, when you make an investment, based on the interest rate and the investment maturity term, you should be able to calculate your return.

Those are my interpertations. Hope it's helpful.

Answer 3

Simple..
The greater the risks you take... the greater the rewards you make for succeeding,

What this means is certain types of investments have a greater risk of losing value in anygiven year...and should gain more when they go up in exchange.

For example: CD's at the bank.. gauranteed not to lose principal.. you earn a minimal rate of return for this security.

Large cap stock... greater chance of being down at any moment and also greater chance of erning more when up.

In general this rule means that to make an above average return you are subject to greater risk... if you eliminate risk expect to eliminate great returns also.

Answer 4

Without taking risk you won't earn much return, more risk is more volatile, you can make or lose much more.

Think about investing you retirement money, put it in a low risk place like a passbook savings at the bank or in US government Treasuries you will get about 5% but sleep well at night knowing you won't lose money.

Invest in large cap stocks like GE and you risk losing something but probably not everything unless they go belly up.

Investing in a Mutual fund that tracks an index is likely to beat the safe investments and large cap stocks but you could lose up to about 40% but you could gain about 40% a year and over a very long term you are very likely to make money.

Invest in highly leveraged things like flipping houses you could double your money or lose more than you put in.

Loaning it all to your brother in law because he has bad credit but he promises to pay you back 4 times as much next month is either going to make you very rich or very poor.

You have to take risk to make money, but you have to weigh your odds and your risk tolerance.