Investment Risk and Return - The Basic Principles

Financial Regulation Courses (FRC)

Overview

The Investment Risk and Return: The Basic Principles course, offered by Financial Regulation Courses (FRC), provides a foundational understanding of the key principles governing investment risk and return.
This course introduces learners to fundamental concepts such as risk measurement, types of risk (market, credit, liquidity), and the risk-return trade-off.
Additionally, the course covers the tools used to evaluate investments and the role of diversification in risk management.
Participants will gain practical skills to assess different types of investments and the risk factors associated with them, ensuring they can make informed decisions in the financial markets.

Learning Objectives

By the end of this course, learners will:

• Understand the key principles of investment risk and how they impact investment returns.


• Differentiate between various types of risks, including market, credit, liquidity, and systemic risks.


• Learn to measure and evaluate risk using standard financial tools and concepts such as standard deviation, beta, and value at risk (VaR).


• Comprehend the concept of the risk-return trade-off and its application to portfolio management.


• Explore the role of diversification in risk reduction and portfolio optimisation.


• Gain practical insights into investment evaluation tools, including risk-adjusted returns, alpha, and the Sharpe ratio.


• Apply the basic principles of risk and return to different asset classes, including equities, bonds, and real estate.

Learning Outcomes

Upon successful completion of the course, learners will:

• Be able to assess and quantify investment risks and evaluate their impact on potential returns.


• Confidently differentiate between systematic and unsystematic risks and identify ways to mitigate each.


• Calculate and interpret risk metrics such as standard deviation, beta, and VaR, and use them to inform investment decisions.


• Understand the relationship between risk and return and apply this knowledge to develop balanced investment portfolios.


• Utilise diversification techniques to reduce risk and enhance portfolio performance.


• Evaluate investments based on risk-adjusted returns using tools like the Sharpe ratio and alpha.


• Make informed decisions regarding investment strategies based on a solid understanding of risk management principles.