Risk,Return,and Financial Markets We can examine returns in the financial markets to help us determine the appropriate returns on non-financial assets Lessons from capital market history There is a reward for bearing risk The greater the risk,the greater the potential reward oThis is called the risk-return trade-off3 Risk, Return, and Financial Markets n We can examine returns in the financial markets to help us determine the appropriate returns on non-financial assets n Lessons from capital market history q There is a reward for bearing risk q The greater the risk, the greater the potential reward q This is called the risk-return trade-off