Risk reward relates to the evaluation of the risk and reward profile of an investment opportunity to come to the decision of whether we should invest. Investing is not an exercise to invest in stocks with the highest return potential because that may come with disproportionally high risks and lead to permanent capital loss. Rather, astute investors look for opportunities that offer the most attractive risk-adjusted return. We’ll start by learning the different measurements of reward and the different types of risks. Then we’ll learn how to think about investments with the most attractive risk reward dynamics.
- Different measurements of return
- Different types of risks
- Balancing risk and return