BUSINESS STUDIES

PROJECT
EAST POINT SR. SEC.
SCHOOL
AJMER
Name: Arpita Siddhpuria

Class: 12th Commerce

Submitted to:
Renu Prajapati
 ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to
my business studies teacher “Mrs. RENU PRAJAPATI”
for their able guidance and support in completing my
project.
I would also like to extend my gratitude to the
principal ma’am “Mrs. Vinita Chauhan” for providing
me with all the facility that was required.

Arpita Siddhpuria
12th”commerce”
RISK AND
RETURN IN
INDIA
WHAT IS RISK????
 Risk measures the uncertanity that an
investor is willing to take to realize a
gain from an investment.
 In Finance,risk refers to the degree of
uncertanity and /or potential financial
loss inherent in an investment decision.
 Types of risk in finance

Systematic Risk Unsystematic Risk

Market Interest Inflationary Business Risk

Risk Risk risk

Demand
Price Financial Risk
Inflation
Risk
Risk

Reinvest Cost Operational

ment Inflation Risk
Risk Risk
WHAT IS RETURN??
 Return refers to either gains or losses
made from trading a security.
 In finance, return is a profit on an
investment . It comprises any change in
value of the investment , and/or cash
flows which the investor receives from
the investment.
 Types of return
INTEREST
Investments like savings accounts , GICs and Bonds pay interest.

DIVIDENDS
Earnings to a company like cash or stock. You get a regular
income from these investments.

CAPITAL GAIN
Sell an investment like a stock, bond, mutual fund or ETF
,for more than you paid for it, you will have a capital gain.
RELATIONSHIP BETWEEN RISK AND RETURN
1. DIRECT RELATIONSHIP BETWEEN RISK AND RETURN.

A) High Risk – High B) Low Risk – Low

Return Return

According to this type of It is also direct relationship

relationship, if investor
will take more risk , he
will get more reward.
So he invested million ,
it means his risk of loss
is million dollar.
between risk and return. If
investor decreases
investment. It means, he is
decreasing his risk of
loss , at that time , his
return will also decrease.
2.NEGATIVE RELATIONSHIP BETWEEN RISK AND RETURN
A) High Risk-Low
Return
Investor increases investment
amount for getting high
return but with increasing
return, he faces low return
because it is nature of that
project. There is no benefit
to increase investment in
such project.
B) Low
Risk- High Return
There are some projects, if you
invest low amount , you can
earn high return. For
example , Govt. of India need
money .Because , Govt. needs
this money in emergency and
govt. Is giving high return on
small investment.
FACTORS AFFECTING RISK AND RETURN.

5 key factors that can affect your investment

risk tolerance.
1. Your investment time frame
2. Your risk capital
3. Your investment experience
4. Your investment objectives
5. The actual investment you are considering
1) YOUR INVESTMENT TIME FRAME

As often we will refer to as ‘age based’

investment risk tolerance. It is conventional
wisdom that a younger investor has a long-
term time horizon and take more risk. Such as,
an elderly individual would have low
investment risk tolerance. If the time horizon
is relatively short, risk tolerance should shift to
be more conservative.
2) YOUR RISK CAPITAL
Risk capital is money available to invest or trade
that will not affect your lifestyle if lost. It
should be defined as liquid capital, or capital
that can easily be converted into cash.
3) Your investment experience
When it comes to determining your risk
tolerance, your level of investing must also be
considered.It is praudent to begin new venture
with some degree of caution , and investing is no
different.Aim to get some experience under your
belt before committing too much capital.
 4) Your investment objective
Your investment objectives must also be
considered when calculating how much risk can
be assumed. If you are saving for your retirement,
how much risk do you really want to take with
those funds?
5)The actual investment you are
considering
Different investments carry different levels of risk.
All investments involve a degree of risk and
returns can never be guaranteed so it is important
to choose investments that suits your
circumstances.
RETURN ON INVESTMENT (ROI)
 Return on investment is the profit expressed as a
percentage of the initial investment.
 ROI is the ratio between the net profit and cost of
investment resulting from an investment of some
resource.
 A high ROI means the investments gains compare
favorably to its cost.
 ROI measures the gain or loss generated on an
investment relative to the amount of money invested.
 ROI Formula:-

ROI = NET PROFIT

100
INVESTMENT

Uses of ROI:-
• Calculations are simple.
• Help investor to decide whether to take or skip an
investment opportunity.
• Investor can separate low performing investments from
high performing investments.
THANK
YOU