Seminar report on

Risk-return tradeoff
Submitted by

Pradip Routh
Reg. no - 0906247013

Introduction :People have many motives for investing. For most investors, however, their interest in investment is largely pecuniary- to earn a return on their money. However, selecting stocks exclusively on the basis of maximization of return is not enough.
To sat that investors like return and dislike risks is, however, simplistic. To facilitate our job for analyzing securities and portfolio within a return-risk context are, we must begin with a clear understanding of what risk and return are, what creates them, and how they should be measured.
The ultimate decisions to be made in investment are (1 ) what securities should be held and (2) how much money should be allocated to each. These decisions are normally made in two steps. First estimates are prepared of the return and risk associated with available securities over a forward holding period. This step is known as security analysis. Second risk-return estimates must be compared in order to decide how to allocate available funds among these securities on a continuing basis.
Security analysis is built around the idea that investors are concerned with two principle properties inherent in securities; the return that can be expected from holding a security, and the risk that the return that is achieved will be less than the return that was expected. The primary purpose herein is to focus upon return and risk and how they are measured. Importance :The relationship between risk and return is a fundamental financial relationship that affects expected rates of return on every existing asset investment. The Risk -Return relationship is characterized as being a "positive" or "direct" relationship meaning that if there are expectations of higher levels of risk associated with a particular investment