ABSTRACT
Capital is scarce, so the concept of ‘return on investment’ [ROI] is paramount in the world of business. People with funds to invest will want a return on their money.
Investors who want a stream of assured income may choose government stocks paying regular half-yearly interest. But equity returns are likely to be riskier, since they involve investing money today in the hope of benefits in the uncertain future. Even so, taking capital growth into account as well as dividends, the expected return on a company’s equity shares may be higher than on ‘risk-free’ government (‘giltedged’) securities.
