The document discusses key concepts related to investment returns and risks. It defines return as the level of profit from an investment, including current income and capital gains or losses. Key factors that influence returns are the type of investment, risks, and external economic and political forces. The time value of money is important in measuring returns, as is calculating required, real, and risk-free returns. Risks to investments include business, interest rate, currency exchange, tax, market, and event risks. Risk is evaluated at both the single asset and portfolio levels.

1. Return and Risks

6. Table 4.4 Historical Returns for Popular Security Investments (1926-2005)

14. Table 4.6 Key Financial Variables for Four Investment Vehicles

16. Figure 4.1 Earning Interest on Interest

26. Table 4.11 Returns, Standard Deviations, and Coefficients of Variation for Popular Security Investments (1926–2005)

27. Figure 4.2 Risk-Return Tradeoffs for Various Investment Vehicles