Please give us one example from your research, work, or personal life explaining The difference between risk...

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Finance

Please give us one example from your research, work, or personallife explaining
The difference between risk and return in owning stocks.
The concepts of the Capital Asset Pricing Model.
How to determine a firm's future profit potential and relationto stock price.

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Difference between risk Return from owning stock Risk Stock returns are not based on contractual obligations and hence not guaranteed Even in the case of a guaranteed payment risk is there based on the capability of the guarantor to fulfill he obligation Hence there is a possibility of incurring losses or not getting the rate of return as anticipated For example the cost of one share of company acquired today is 100 The investor expects dividend yield 10 every year and capital appreciation of 8 proportionate to the period of holding However neither of these returns are assured The company may end up in less profits or in losses Price realization on selling the share afterwards might be less than 8 per year or even less than the See Answer

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