Ratio Analysis LET US SUM UP - Accounts and Finance for Managers

The variability of the actual return from the expected return which is associated with the investment /asset known as risk of the investment. Variability of return means that the Deviation in between actual return and expected return which is in other words as variance i.e., the measure of statistics. Greater the variability means that Riskier the security/ investment. If the rate of interest increases then the price of the existing securities will come down due to more attraction on the new instruments due to lesser demand on the existing securities more particularly during the periods of inflationary period. The govt & Treasury bills are bearing greater certainty to receive the benefits which have least probabilities to fail, denominates that is Lesser Liquidity Risk. The risk is nothing but the difference in between the optimistic and pessimistic returns, in other words range of the returns. The range of the returns is nothing but the difference in between highest and lowest returns which normally arise during the periods of boom and recession. The greater the range refers to the greater the amount of risk and vice versa. Systematic Risk only requires the investors to expect additional return / compensation to bear the Unsystematic Risk investors are not given to any such additional compensation to bear unlike the earlier.


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