Financial Concepts: Conclusion
We hope that this has given you some insight into the market and your investment strategies. Let's recap what we've learned in this tutorial:
 The risk/return tradeoff is the balance between the desire for the lowest possible risk and the highest possible return.
 Higher risk equals greater possible return.
 Diversification lowers the risk of your portfolio.
 Dollar cost averaging is a technique by which, regardless of the share price, a fixed dollar amount is invested on a regular schedule.
 Asset allocation divides assets among major categories in order to create diversification and balance the risk.
 Random walk theory says that stocks take a random and unpredictable path.
 Efficient Market Hypothesis (EMH) says it is impossible to beat the market because prices already incorporate and reflect all relevant information.
 The concept of the optimal portfolio attempts to show how rational investors will maximize their returns for the level of risk that is acceptable to them.
 Capital asset pricing model (CAPM) describes the relationship between risk and expected return and serves as a model for the pricing of risky securities.
RELATED TERMS

RiskReturn Tradeoff
The principle that potential return rises with an increase in ... 
Capital Asset Pricing Model  CAPM
A model that describes the relationship between risk and expected ... 
International Capital Asset Pricing Model (CAPM)
A financial model that extends the concept of the capital asset ... 
Efficient Market Hypothesis  EMH
An investment theory that states it is impossible to "beat the ... 
Mean Return
1. In securities analysis, it is the expected value, or mean, ... 
Balanced Investment Strategy
A portfolio allocation and management method aimed at balancing ...
RELATED FAQS

What is the breakdown of subjects covered on the Series 6 exam?
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