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Finance Dictionary and Glossary of Investment Terms
risk/return trade-off
Definition 1.
The relation between risk and return that usually holds, in which one must be willing to accept greater risk if one wants to pursue greater returns. also called risk/reward trade-off.
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Definition 2.
A balance that an investor must establish between the desire for low risk and and the lure high returns. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns.
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