Every person invests in securities to earn a return in the form of interest, profit or capital appreciation. A famous quote in finance is, "Higher the return, higher the risk". While investing in security, investors should be aware of the various security risks. Since if there is a return, there will be a risk. We need help finding out any risk-free security(Richardson, 1970). Even the government issuing securities is not risk-free. Several risks are associated with protection, such as liquidity risk, default risk, inflation risk, currency fluctuation risk and reinvestment risk. So, before deciding on the return objectives, the investor needs to consider the risk associated with the security. If the investor is risk-averse, he will not be ready to invest in risky securities. He always prefers securities which provide a lower income with less risk (The Economic Times, 2021). At the same time, the risk-tolerant investor is ready to tolerate any risk to earn a higher return (Gre...
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