ABSTRACT
Every financial decision contains an element of risk and an element of return. The relationship between risk and return exists in the form of a risk-return trade-off, by which we mean that it is only possible to earn higher returns by accepting higher risk. If an investor wishes to earn higher returns then the investor must appreciate that this will only be achieved by accepting a commensurate increase in risk. Risk and return are positively correlated, an increase in one is accompanied by an increase in the other.
