returns; and stocks are riskiest of all but have the potential for still higher returns. In effect, the higher average

return compensates for the higher degree of risk. If risky assets like stocks did not also offer a higher average

return, then few investors would want them.

This tradeoff between return and risk complicates the task of any financial investor: Is it better to invest safely

or to take a risk and go for the high return? Ultimately, choices about risk and return will be based on personal

preferences. However, it is often useful to examine risk and return in the context of different time frames.

The high returns of stock market investments refer to a high average return that we can expect over a period of

several years or decades. The high risk of such investments refers to the fact that in shorter time frames, from

months to a few years, the rate of return may fluctuate a great deal. Thus, a person near retirement age, who
{"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:37:44.339247", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "total_pages": 597, "file_size_mb": 26.99, "file_name": "Microeconomics3e.pdf", "file_type": ".pdf", "batch_upload": true, "producer": "Prince 14.2 (www.princexml.com)", "creationdate": "2022-12-07T14:15:44-06:00", "moddate": "2022-12-07T14:23:05-06:00", "creator": "PDFMiner", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "uploaded_via": "batch_uploader"}