What is risk/return trade-off?
Risk/return trade-off means that an investor must take greater risks to potentially receive a greater return. Risk refers to the possibility that an investment will experience variations in its returns over time. This variation of return is often referred to as \”volatility.\” \”Return\” refers to the increase or decrease in the value of an investment. Return is usually expressed as a percentage or in dollar growth over time. Risk does not mean the risk of loss, but the possibility that over time the returns of an investment will rise and fall.
