Risk and return go hand in hand. Understanding this relationship is critical to making well-reasoned financial decisions, whether you are making personal investment decisions or working for a business where you’re responsible for investing excess cash. This journal assignment allows you to explore the risk-return relationship in the context of investing in stocks in both of these roles.
Prompt
Write a journal discussing risk and return as it relates to investing in stocks.
Specifically, you must address the following rubric criteria:
Investment Risk: Explain key risks associated with investing in stocks.
Investment Return: Discuss events that can cause the price of a stock to increase or decrease.
Risk-Return Relationship: Explain the relationship between risk and return and how this relationship impacts stock investment decisions, using examples to support your claims.
Reflection: Describe whether you make stock-investment decisions in your personal life and how you do or would make those decisions.
Consider the following in your response: Would your decision-making process change if you needed to make stock-investment decisions for a business? Why or why not?
Sample Solution
