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Here is a small view on the topic for students:
- A small idea on Risk and Expected Returns
When investors invest on financial assets, say on purchase of shares, they hope to increase their profit. This means that they hope for positive returns on the investment. However, the investment involves some risks as well because the returns are not always positive. In Finance it is considered that the decisions of an investor are based on what they expect and an assessment of how far that is likely to happen. While considering potential investments on financial assets, these two mentioned elements of the decision-making process are known as ‘expected returns and risks’.
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