Fin/419 fin 419 fin419 week 4 – individual assignment – scott
The profitability versus risk trade-offs of these policies will depend on the specifics of each policy, as well as the company’s overall objectives and financial situation. Generally speaking, policies that have low risk and high potential for a return tend to be rated higher in terms of profitability compared to those with high risk but potentially large rewards. For example, a company looking to invest in safe assets like treasury bonds or certificates of deposit might rate such investments as having a low level of profitability due to their low returns, while more risky investments like stocks or venture capital may be considered medium or even high when it comes to profitability due to their higher expected returns.
Ultimately, it is important for companies to weigh the various risks and rewards associated with different policies before selecting one—the best option for any organization is likely going to vary depending upon its goals and financial situation. However, it can generally be said that policies with lower levels of risk tend to offer greater assurance regarding long term returns and stability for a business’s finances than those deemed highly profitable yet also highly unpredictable.