Risk Reward Relationship

Economics Glossary – Malone Global University

Definition

The risk-reward relationship is the principle that investments or choices with higher potential returns usually come with higher risk, while safer options usually offer lower returns.

Why It Matters

It guides how portfolios are built and helps people choose strategies that match their goals and tolerance for uncertainty.

Example

Stocks typically offer higher expected returns than savings accounts, but with more risk.

Related Terms

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