risk in investing
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You work for an investment firm and recently wrote a position article on your firm's approach to risk. The article now appears on your company's website. It has, interestingly enough, generated e-mailed responses from potential clients and your firm is asking you to address some of their questions for a Frequently Asked Questions (FAQ) segment that will be posted to the site soon. Specifically, some of the respondents have compared investing in the stock market with gambling and state that even some of the financial press have advocated for "dart throwing"- meaning it does not really matter which stocks to choose as returns on all the stocks are similar. These respondents would like a response that further clarifies your firm's position regarding risk in light of these type of statements.
Knowing that both stock investing and Las-Vegas-style gambling do have elements of risk in them, how do you compare the two? Are there any similarities between them? What about dart throwing? In your response, your company has asked that you address these questions building upon the risk-return concepts you identified in the position piece you wrote for the firm. Express yourself in 3 paragraphs.
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dart throwing versus financial analysis
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Las Vegas-style risk is easily calculated depending on the game. You have a 48% chance of winning at a game of black jack, for example. There is not much you can do to control the spin of the roulette wheel, but even betting on odds or even will still net you a 47% chance of winning. With many years of practice and luck, perhaps one can make a modest living at ...
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