Question

What is the meaning of the risk and return and what is relationship between two?

Answer 1

$\color{red} \bf{meaning \: of \: risk}$

_____________________

_____________________

Risk refer to uncertainty that cause many losses to business.It may be

(1)Systematic Risk.

(2) Unsystematic Risk

$\color{red} \bf{systematic \: risk}$

It refers to that risk which happen in every business due to economic factors such as demonitisation,surgical strike etc.It can not be controlled by any business.

It may be

(1) Market risk

(2) Intrest rate risk.

Market risk happen due to change in market forces such as demand and supply.

Interest rate risk happen due to change in interest rate .

$\color{red} \bf{unsystemaic \: risk}$

It refers to that risk which happen in every business due to change in business factors such as production capacity, organization goals etc.It is easily controlled by any business .

It may be

(1) Business Risk

(2) Financial Risk

Business risk happen due to change in business factors .

Financial risk happen due to change in financing condition in business.

__________________________________

__________________________________

$\color{blue} \bf{relationship \: between \: risk \: and \: return}$

#### There is positive relationship between Risk and Return.It means higher risk ,more return or lower risk ,lower return .

• If investor choose to invest more in bonds i.e lessrisky,it means he gain less return .On the other hand, if investor invest more in equity stock,i.e more risky ,it means he gain more return because of more risk.

HOPE IT'S HELPS YOU☺️

#THNKX#

Answer 2

$\huge{\underline{\underline{\boxed{\boxed{\mathfrak{\red{Hi \:Dear}}}}}}}$

${\large\bf{\mid{\overline{\underline{Answer}}}\mid}}$

Risk refer to uncertainty that cause many losses to business.It may be

(1)Systematic Risk.

(2) Unsystematic Risk