Risk return trade off là gì
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Risk/reward tradeoff là Rủi ro / phần thưởng sự cân bằng. Đây là nghĩa tiếng Việt của thuật ngữ Risk/reward tradeoff - một thuật ngữ được sử dụng trong lĩnh vực kinh
doanh. Mối quan hệ trực tiếp giữa các nguy cơ có thể thưởng có thể nắm giữ cho một tình huống cụ thể. Để nhận ra ai lớn thưởng thường phải chấp nhận nhiều rủi ro hơn, và ngược lại. Còn được gọi là rủi ro / lợi nhuận cân bằng. Direct
relationship between possible risk and possible reward which holds for a particular situation. To realize greater reward one must generally accept a greater risk, and vice versa. Also called risk/return tradeoff. Source: Risk/reward tradeoff là gì? Business Dictionary Beware of scam calls and scam messages impersonating as CPF officers asking for your personal details. Ignore them and do not share your Singpass ID/password or banking details with anyone. CPF officers will NOT ask for your Singpass, banking userid or password. Scheduled Maintenance: CPF digital services will not be available from 5 Nov 2022, 10pm to 6 Nov 2022, 8am. What is the Risk-Return Tradeoff?The risk-return trade-off states that the level of return to be earned from an investment should increase as the level of risk goes up. Conversely, this means that investors will be less likely to pay a high price for investments that have a low risk level, such as high-grade corporate or government bonds. Different investors will have different tolerances for the level of risk they are willing to accept, so that some will readily invest in low-return investments because there is a low risk of losing the investment. Others have a higher risk tolerance and so will buy riskier investments in pursuit of a higher return, despite the risk of losing their investments. Some investors develop a portfolio of low-risk, low-return investments and higher-risk, higher-return investments in hopes of achieving a more balanced risk-return trade-off. A canny investor delves into the fundamentals of a prospective investment to gain insights into the actual amount of risk associated with it. If this investor perceives that the actual risk level differs from the general perception, then this difference can be exploited to achieve above-average returns. What is Risk-Return Tradeoff?The risk-return tradeoff states that the potential return rises with an increase in risk. Using this principle, individuals associate low levels of uncertainty with low potential returns, and high levels of uncertainty or risk with high potential returns. According to the risk-return tradeoff, invested money can render higher profits only if the investor will accept a higher possibility of losses. Risk-Return TradeoffUnderstanding Risk-Return TradeoffThe risk-return tradeoff is the trading principle that links high risk with high reward. The appropriate risk-return tradeoff depends on a variety of factors including an investor’s risk tolerance, the investor’s years to retirement and the potential to replace lost funds. Time also plays an essential role in determining a portfolio with the appropriate levels of risk and reward. For example, if an investor has the ability to invest in equities over the long term, that provides the investor with the potential to recover from the risks of bear markets and participate in bull markets, while if an investor can only invest in a short time frame, the same equities have a higher risk proposition. Investors use the risk-return tradeoff as one of the essential components of each investment decision, as well as to assess their portfolios as a whole. At the portfolio level, the risk-return tradeoff can include assessments of the concentration or the diversity of holdings and whether the mix presents too much risk or a lower-than-desired potential for returns. Key Takeaways
Special ConsiderationsMeasuring Singular Risk in ContextWhen an investor considers high-risk-high-return investments, the investor can apply the risk-return tradeoff to the vehicle on a singular basis as well as within the context of the portfolio as a whole. Examples of high-risk-high return investments include options, penny stocks and leveraged exchange-traded funds (ETFs). Generally speaking, a diversified portfolio reduces the risks presented by individual investment positions. For example, a penny stock position may have a high risk on a singular basis, but if it is the only position of its kind in a larger portfolio, the risk incurred by holding the stock is minimal. Risk-Return Tradeoff at the Portfolio LevelThat said, the risk-return tradeoff also exists at the portfolio level. For example, a portfolio composed of all equities presents both higher risk and higher potential returns. Within an all-equity portfolio, risk and reward can be increased by concentrating investments in specific sectors or by taking on single positions that represent a large percentage of holdings. For investors, assessing the cumulative risk-return tradeoff of all positions can provide insight on whether a portfolio assumes enough risk to achieve long-term return objectives or if the risk levels are too high with the existing mix of holdings. |
