OverviewRisk and return go hand in hand. Understanding this relationship is critical to making...

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OverviewRisk and return go hand in hand. Understanding this relationship is critical to making well-reasoned financial decisions, whether you are making personal investment decisions or working for a business where you’re responsible for investing excess cash. This journal assignment allows you to explore the risk-return relationship in the context of investing in stocks in both of these roles.PromptWrite a journal discussing risk and return as it relates to investing in stocks.Specifically, you must address the following rubric criteria:Investment Risk: Explain key risks associated with investing in stocks.Investment Return: Discuss events that can cause the price of a stock to increase or decrease.Risk-Return Relationship: Explain the relationship between risk and return and how this relationship impacts stock investment decisions, using examples to support your claims.Reflection: Describe whether you make stock-investment decisions in your personal life and how you do or would make those decisions.Consider the following in your response: Would your decision-making process change if you needed to make stock-investment decisions for a business? Why or why not?Guidelines for SubmissionYour submission must be a 4- to 5-paragraph Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style.

Khushboo · Accepted Answer

Risk and return play an important role in the investment decision of the stock. It is important to note that without risk there is no return. Hence balance should be made between the risk and return before the stock investment.
Key risks connected with the investment in stocks
There are various risks associated with the investment in stocks such as stock price risk, the risk associated with the headlines of the media, risk of rating, risk of obsolescence, detection risk, legislative risk, and interest rate risk. Commodity price risk is the risk of change in the commodity price i.e. change in the price of the commodities creates the risk in the investment decisions. In other words, when there is a rise in the price of commodities the consumers tend to rein in spending. Headline risk is the risk that the news of the media will impact the business such as any bad news will affect the stock market adversely and vice-versa. Moreover, obsolescence risk is the risk that the business of the entity is going obsolete and with the increase in technology, this rise will increase more over the coming time. Legislative risk is the risk of the relationship between the government and business such as the action of the government will create the risk for the entity and will adversely affect the investment decisions of the potential investors. In addition to this,

Overview Risk and return go hand in hand. Understanding this relationship is critical to making well-reasoned financial decisions, whether you are making personal investment decisions or working for a...

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