Question

When comparing the rate of return on various assets, what is the most important consideration and why?

Answer 1

There are different considerations associated with the various assets, but the most important consideration is the riskiness or level of risk associated with the asset. It is the most important consideration, because risk level along with the return profile, make the asset suitable for the particular group of investors. For example, any body above the age of 50 years, would like to have assets with negligible risk even if the return is lower. Though an individual investor with age group of 25 to 35 years, would like to take more risk if it can fetch higher return. So, risk profile is the most important consideration.