RISK & RETURN:

Investment decisions are influenced by various motives. Some people invest in a business to acquire control & enjoy the prestige associated with in. some people invest in expensive yachts & famous villas to display their wealth. Most investors, however, are largely guided by the pecuniary motive of earning a return on their investment. For earning returns investors have to almost invariably bear some risk. In general, risk & return go hand in hand. Sometimes the best investments are the ones you don't make. This is a maxim which best explains the complexity of making investments. There are many investment avenues available for investors today. Different people have different motives for investing. For most investors their interest in investment is an expectation of some positive rate of return. But investors cannot overlook the fact that risk is inherent in any investment. Risk varies with the nature of return commitment. Generally, investment in equity is considered to be more risky than investment in debentures & bonds. A closer look at risk reveals that some are uncontrollable (systematic risk) and some are controllable (unsystematic risk).