Risk Return Rate
Risk refers to the fact that people can take certain actions in advance. Probably And the consequences of each Consequence Possibility of occurrence. Risk reward refers to the part of the extra reward that investors get over time value because of their risk.
risk
The rate of return is the part of the extra rate of return that the investor exceeds the time value rate because of his risk, that is, the ratio of risk reward to original investment.
Risk return rate is an important part of the return rate of investment projects. If we do not consider the inflation factor, the rate of return on investment is the sum of the time value rate and the risk return rate.
Formula for calculating risk return rate
The formula of risk return rate:
Formula: KR indicates risk return rate; beta indicates risk reward coefficient; V represents standard deviation rate.
Without considering the inflationary factors, the total return rate of investment is:
K = RF + KR = RF + beta V
Among them, K represents the rate of return on investment; RF means risk-free rate of return.
Risk reward coefficient is a measure of enterprise's risk. It is generally assessed by professional institutions, and can also be derived from investment projects in previous years.
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