In return
for taking on the risk of complicated transactions, many private equity funds expect to command returns in the teens or even higher.
However, investors are still being
rewarded for taking on risk in many areas of equities and credit, especially given the poor compensation for risk in government bonds.
However, under our economic system, the normal
compensation for taking on risk is to also participate in a share of the profit, if a profit happens to show up.
While this adds risk, I get paid much
more for taking on this risk and typically the contracts that I sell are far out of the money (thus limiting the risk).
Your incentive or reward
for taking on this risk by investing your savings is the expectation of getting a «return» on your money.
However, if an investment is viewed as higher risk, investors demand adequate compensation through a higher yield spread in
exchange for taking on the risk of their principal declining.
Our return expectations across most asset classes are at post-crisis lows, but we believe investors are getting
compensated for taking on risk in equities, selected credit / emerging markets (EM) and alternatives.
Choosing the strike prices for your iron condor position — and deciding how much cash credit you are willing to
accept for taking on the risk involved — are irrevocably linked.
The success of the pending bond sale and the yields investors are willing to accept in
return for the taking on the risk of lending their money to Puerto Rico will be very telling.
Both the height and the steepness of efficient frontiers signal the degree to which markets are offering future
reward for taking on risk.
The company must have long - term potential; it needs some sort of sustainable competitive advantage that will keep it in business for years to come; he wants double - digit returns — «Why bother buying a business if you're not getting at least
that for taking on the risk of owning a company?»
As investors, we deserve a rate of return that compensates
us for taking on risk.
The reward
for taking on risk is the potential for a greater investment return.
The interest rate, the lender's reward
for taking on risk, has a direct impact on the size of a mortgage payment: If the interest rate on a $ 100,000 mortgage is 6 %, the combined principal and interest monthly payment on a 30 - year mortgage would be something like $ 599.55 ($ 500 interest + $ 99.55 principal).
For taking on that risk, the Somerville provider rewards you with lower premiums.