Risk and reward go hand in hand and have a direct relationship. Return is the reward that a person gets for taking risk.
We will first look at the various measures of risk, that is how risk can be measured and a particular investment can be gauged.
The various measures of risk are discussed below:
In certain investment cases, a simple variance or standard deviation can give misleading results if the conditions for two or more investment alternatives are not similar. So we use an adjusted measure called as coefficient of variation (CV). It is calculated as:
Standard rate of return/Expected rate of return
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