What are the factors that cause variations in return and risk?
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Rate of return is directly proportional to the risk involved in the investment.
The factors that cause variations in the return and risk are broadly classified under 2 heads:
1) Systemic
2) Unsystemic.
Systemic risks include the changes in the socio-economic status of the socity while unsystemic risks include labor strike, inefficiency of the management, scarcity of the raw material etc
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