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Risk and Return in Investment (Financial Management) (PowerPoint PPT Slide Deck)
PowerPoint (PPT) 51 Slides
BENEFITS OF THIS POWERPOINT DOCUMENT
- Provide of the Risk and Return Concepts
- Provides of Portfolio (market) Risk
- Provides of Risk and return: CAPM/SML
FINANCIAL MANAGEMENT PPT DESCRIPTION
Risk and Return in Investment (Financial Management)
Lecture Outline
1. Basic return concepts
2. Basic risk concepts
3, Stand-alone risk
4, Portfolio (market) risk
5. Risk and return: CAPM/SML
Return on investment is the profit expressed as a percentage of the initial investment. Profit includes income and capital gains. Risk is the possibility that your investment will lose money.
You cannot eliminate risk, but you can manage it by holding a diversified portfolio of stocks, bonds and other assets. The portfolio composition should be consistent with your financial objectives and tolerance for risk. Investment returns tend to be higher for riskier assets. For example, savings accounts, certificates of deposit and Treasury bonds have lower rates of return because they are safe investments, while long-term returns are higher for growth stocks and other riskier assets.
Risk is the likelihood that actual returns will be less than historical and expected returns. Risk factors include market volatility, inflation and deteriorating business fundamentals. Financial market downturns affect asset prices, even if the fundamentals remain sound. Inflation leads to a loss of buying power for your investments and higher expenses and lower profits for companies.
Business fundamentals could suffer from increased competitive pressures, higher interest expenses, quality problems and management inability to execute on strategic and operational plans. Weak fundamentals could lead to declining profits, losses and eventually a default on debt obligations.
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Source: Best Practices in Financial Management, Return on Investment PowerPoint Slides: Risk and Return in Investment (Financial Management) PowerPoint (PPT) Presentation Slide Deck, UJ Consulting
ABOUT THE AUTHOR
UJ Consulting
Untung Juanto ST., MM. Founder of UJ Consulting. He is professionally experienced business and management consultant in several local and multinational companies. He has an experience in managing an effective and efficient company with various approach methods adapted to different industries because He had a career from the lower management level as Supervisor before finally
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