High Risk = High Return: A myth?

Published: 26 May 2020| Version 1 | DOI: 10.17632/7jj59tg6fn.1
Rashi Khandelwal


Do you lose control by investing in risky securities? Are low risky investments the best options for those who like to play it safe? Why do people speculate in risky assets? What is value investing and why do legends like Warren Buffet and Peter Lynch prefer value investing? This research will address these questions and will focus on busting the financial myth of “You need to speculate to accumulate”. It will analyze the returns generated by stocks having high risk and stocks having low risk linked to a real-time basis by taking the historical prices. The paper will conduct hypothesis testing regarding the statement proposed that whether risky investments generate higher returns or not. The research will give light on Low-volatility anomaly and will provide a solution in determining which kind of stock will be a safer bet to generate higher returns in a longer time frame. The research will consider the financials of the riskiest stocks in the past few years and will analyze their return accordingly.



Financial Market, Return on Investment, Risk