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Risk and Return Concepts

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I need help understanding the concepts of risk and return. I also need to know the importance of portfolio diversification and the relationship to risk and return. Please provide a source where I can find more information on these concepts.

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Solution Summary

This solution explains the concept of risk and return, describes the different types of risk, explains the importance of portfolio diversification and its relationship to risk and return, and provides a source for more information.

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The concept behind risk and return is simply the lowest amount of risk willing to be taken in exchange for the highest potential return, i.e. investments that yield greater than the minimum rate of return.

There are two types of risk: firm-specific, which ...

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