Question

Stock performance in terms of risks and returns

Answer 1

The risk-return relationship. Generally, the higher the potential return of an investment, the higher the risk. There is no guarantee that you will actually get a higher return by accepting more risk. Diversification enables you to reduce the risk of your portfolio without sacrificing potential returns.

Answer 2

Explanation:

The risk-return tradeoff states that the potential return rises with an increase in risk.

According to the risk-return tradeoff, invested money can render higher profits only if the investor will accept a higher possibility of losses.