SOME COMMON MEASURES OF RISK-RETURN EVERY MBA STUDENT MUST KNOW wellarticles.com

Risk in finance refers to the likelihood that actual performance will deviate from predicted values. Risk is defined as the variability of returns in the Capital Asset Pricing Model (CAPM). According to the risk and return principle, riskier investments have higher projected returns. Higher-risk investments reimburse shareholders for the higher unpredictability and greater risk. The knowledge about risk and return and the measure of risk-return are essential for every MBA student.