There are different motives for investment. The most prominent among all is to earn a return on investment. However, selecting investments on the basis of return in not enough. The fact is that most investors invest their funds in more than one security suggest that there are other factors, besides return, and they must be considered. The investors not only like return but also dislike risk. So, what is required is:
- Clear understanding of what risk and return are,
- What creates them, and
- How can they be measured?
Return: The return is the basic motivating force and the principal reward in the investment process.… Read the rest