Financial management

what is mean by risk-return trade-off in capital budgeting?

Replies (1)

The principle that potential return rises with an increase in risk.

Low levels of uncertainty (low-risk) usally have low potential returns & vice versa 

According to the risk-return tradeoff, invested money can render higher profits only if it is subject to the possibility of being lost(risk). (In simple terms risky capital proposals yeild more return).

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