Risk and Return Analysis - Subjective Questions

1. How does the concept of risk influence an investor's decision-making process when choosing between different investment opportunities?
2. Discuss the trade-off between risk and return in the context of investment. Provide examples to illustrate your points.
3. Explain the difference between systematic risk and unsystematic risk, and how these types of risks impact an investment portfolio.
4. In your opinion, is it always true that higher returns are associated with higher risks? Provide examples to support your viewpoint.
5. Imagine you're advising a risk-averse individual nearing retirement. How would you suggest they structure their investment portfolio to balance risk and potential returns?
6. Discuss the role of diversification in managing investment risk. Is it a foolproof strategy, or are there limitations to its effectiveness?
7. Consider two investment options: one with a consistent, moderate return and another with volatile returns but the potential for high profits. How would an investor's risk tolerance impact their choice between these options?
8. Explain the concept of the risk-free rate and its importance in calculating the expected return of an investment. How does it relate to the risk premium?
9. When analyzing potential investments, how might a person's investment goals and time horizon influence their willingness to take on greater risk?
10. Compare and contrast the Capital Asset Pricing Model (CAPM) and the Fama-French Three-Factor Model in assessing investment risk and expected returns. Discuss their assumptions and practical applications