The risk-return tradeoff is a financial principle that indicates the relationship between the potential risk involved in an investment and the expected return from that investment. Generally, higher levels of risk are associated with higher potential returns, while lower levels of risk correspond to lower potential returns. Understanding this tradeoff is crucial for investors to make informed decisions about where to allocate their resources in pursuit of optimal value.
congrats on reading the definition of risk-return tradeoff. now let's actually learn it.