Return-Risk Tandem, Decisive Factor in Taking the Financial Decision

Abstract

The meaning of any economic activity is to obtain the maximum possible value, under any conditions of economic environment. The development of the economic act in the presence of risks of different nature, leads, depending on how they are managed, to different results between companies from the same sector of activity, with comparable endowments. The aim of the paper is to present some methodological aspects of business selection according to the proportionality of risk profitability, in the conditions of a rational behavior of investors. The market is generally showing a tendency to equalize the marginal profitability, but in a relatively long time, due to a variety of factors such as management experience, time to access and process information, and its correct interpretation, ability to anticipate and control risks.

Keywords

• financial return
• financial risk
• capital investment
• final capital
• systematic risk