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RISK VERSUS RETURN
Let’s begin by defining risk, which can be defined as "uncertainty" and “volatility”; the uncertainty that the actual return on an investment will be different from its expected return or of not knowing what’s going to happen to your investment; and volatility because the amount an investment fluctuates up and down in value. Risk is measured in a variety of ways, the most common of which are standard deviation and Beta. These measurements show how much variation there is on an investment’s return.
The return on an investment should compensate for the level of risk undertaken. ... Diversification reduces a lot of the volatility and risk and this is exactly what Lincoln has done.
Company Diversification – Lincoln invests in other companies not exposed to the same risks to balance any potential risks and negative return.
Geographical Diversification – Lincoln also has business in the United Kingdon, leveraging its risk in the United States.
Approximate Word count = 778
Approximate Pages = 3.1
(250 words per page double spaced)
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