The Relation Between Return and Risk

question 98

Essay

The relation between return and risk.

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Definitions:

CAPM Approach

Capital Asset Pricing Model, a framework used to determine the theoretical appropriate required rate of return of an asset, considering risk and the cost of capital.

Retained Earnings

The portion of a company's net income that is kept within the company rather than distributed to shareholders as dividends.

Target Capital Structure

The mix of debt, equity, and other securities a company aims to hold to finance its operations and investments.

Retained Earnings

Profits that a company keeps or retains rather than distributing to shareholders in the form of dividends, typically used for reinvestment.