Risk and Return in Investing

• Risk: The uncertainty of an investment’s outcome. Higher risk can lead to greater returns but also potential losses.
• Return: The profit or loss from an investment over time.

Types of Investments by Risk and Return:

• Low Risk, Low Return: Treasury bills.
• Moderate Risk, Moderate Return: Index funds offering diversification.
• High Risk, High Return: Penny stocks.

ROI (Return on Investment): Measures the gain or loss relative to the initial investment. For example, a $100 investment turning into $150 has a 50% ROI.