do investments with higher risks yield better returns 
not necessarily the appropriate risk return tradeoff depends on a variety of factors including an investor s risk tolerance the investor s years to retirement and the potential to replace lost funds time also plays an essential role in determining a portfolio with the appropriate levels of risk and reward according to risk return tradeoff invested money can render higher profits only if the investor is willing to accept a higher possibility of losses the bottom linerisk return tradeoff is the trading principle that links risk with reward according to risk return tradeoff if the investor is willing to accept a higher possibility of losses then invested money can render higher profits to calculate investment risk investors use alpha beta and sharpe ratios 