Explain key risks associated with investing in stocks.

Risk and return go hand in hand. Understanding this relationship is critical to making well-reasoned financial decisions, whether you are making personal investment decisions or working for a business where you’re responsible for investing excess cash. This journal assignment allows you to explore the risk-return relationship in the context of investing in stocks in both of these roles.

Prompt

Write a journal discussing risk and return as it relates to investing in stocks.

Specifically, you must address the following rubric criteria:

• Investment Risk: Explain key risks associated with investing in stocks.
• Investment Return: Discuss events that can cause the price of a stock to increase or decrease.
• Risk-Return Relationship: Explain the relationship between risk and return and how this relationship impacts stock investment decisions, using examples to support your claims.
• Reflection: Describe whether you make stock-investment decisions in your personal life and how you do or would make those decisions.
  • Consider the following in your response: Would your decision-making process change if you needed to make stock-investment decisions for a business? Why or why not?

Guidelines for Submission

Your submission must be a 4- to 5-paragraph Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style.