The goal of investing is to make a profit. To achieve this goal, the investor places his money at risk with the hope of increasing his wealth. Whether by buying real estate, depositing funds in a savings account, or buying shares of stock, the investor wants to protect his current assets and make a profit.
Investors invest with an intuitive knowledge of risk.
But only the banking community has been able to quantify both the expected profit and the risk. Most banks provide a specified rate of return in a risk-free environment. Prudent money market investors carefully scrutinize interest rates knowing that the risk is negligible. 5 year subscription to Working Money. Free book selection.