Important Points for IC 99 - Asset Management Exam
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The appropriate risk-return tradeoff depends on a variety of factors including, outlook towards : i) Risk acceptance, ii) Risk appetite, iii) Risk tolerance
Relationship between risks and return on investment is called risk-return spectrum or risk-return tradeoff. This risk-return tradeoff explains the relationship between the amount of return gained on an investment and the amount of risk undertaken in that investment.
Risk refers to the possibility that actual outcome (return) of investment will differ from the expected outcome. Risk is variability or dispersion in outcome.
Standard deviation is a measure of the dispersion or dispersion of a set of data from its mean. Standard deviation (SD / S /
Standard Deviation is analytically and more easily used for measuring deviation and degree of risk. Since risks and return move hand in hand, with the average annual return and the annual standard deviation thereof provide vital statistical measure for risks and return.
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