INTRODUCTION TO RISK-RETURN RELATIONSHIP

Investors sometimes think of the securities market the same way they think about the blackjack tables at a casino: You "invest" your money or chips, and then you either win or lose the game. Yet real-life investing is more complicated than this simple scenario. More often than not, the game is not a win-all or lose-all proposition. It's somewhere in between. Investing in a new, high-risk company offers the prospect of higher returns; and investing in a low-risk, well-established company offers a more predictable return.

This tutorial addresses the basic concepts related to risk and reward in the investment world.

Risk Tolerance Investment Risk Gauging the Risk of Investments Diversification Common Investment Strategies The More the Risk, the More the Potential Return

Let's begin by exploring the topic of risk tolerance.