An investment is a commitment of funds made in expectation of a positive rate of return in the future. The motive behind investment varies from person – for most investors, however, their interest is primarily to earn a return on their money. But the return on a stock market security is subject to risk. Risk refers to the uncertainty surrounding actual realization of the rate of return offered by an investment. The time element refers to the period of waiting required to reap the reward. Accordingly, most early investment decisions have three key aspects:return, risk, and time. Investors’ goals are usually expressed in terms of return – the hard fact is that in most cases return and risk are inseparable.
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