{"id":777,"date":"2010-10-06T09:46:44","date_gmt":"2010-10-06T13:46:44","guid":{"rendered":"http:\/\/thestockmarketwatch.com\/learn-stock-market\/?p=777"},"modified":"2016-05-02T12:14:53","modified_gmt":"2016-05-02T16:14:53","slug":"financial-concepts-conclusion","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-conclusion\/","title":{"rendered":"10) Financial Concepts: Conclusion"},"content":{"rendered":"<p>Now let us review the key points of this tutorial:<\/p>\n<ul>\n<li>The risk\/return tradeoff is achieving a balance between the desire for the lowest possible risk and the highest possible return.<\/li>\n<li>The higher the risk, the greater possible return.<\/li>\n<li>One way to lower the risk of your portfolio is through diversification.<\/li>\n<li>Dollar cost averaging is a common technique by which a fixed amount is invested on a regular schedule regardless of the price.<\/li>\n<li>Asset allocation divides assets among major categories to balance out the risk.<\/li>\n<li>Random walk theory says that stocks are random and unpredictable.<\/li>\n<li>Efficient Market Hypothesis (EMH) says it is impossible to beat a market price that already incorporates and reflects all relevant information.<\/li>\n<li>The optimal portfolio shows how rational investors will maximize their returns for the level of risk that they are comfortable with.<\/li>\n<li>Capital Asset Pricing Model (CAPM) deals with the relationship between risk and expected return and it also serves as a model for the pricing of risky securities.<\/li>\n<\/ul>\n<ul class=\"lcp_catlist\" id=\"lcp_instance_0\"><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-asset-allocation\/\">05) Financial Concepts: Asset Allocation<\/a><\/li><li class=\"current\"><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-conclusion\/\">10) Financial Concepts: Conclusion<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-efficient-market-hypothesis\/\">07) Financial Concepts:  Efficient Market Hypothesis<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-the-optimal-portfolio\/\">08) Financial Concepts:  The Optimal Portfolio<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-random-walk-theory\/\">06) Financial Concepts: Random Walk Theory<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-dollar-cost-averaging\/\">04) Financial Concepts: Dollar Cost Averaging<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-the-riskreturn-tradeoff\/\">02) Financial Concepts:  The Risk\/Return Tradeoff<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-introduction\/\">01) Financial Concepts<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-capital-asset-pricing-model-capm\/\">09) Financial Concepts:  Capital Asset Pricing Model (CAPM)<\/a><\/li><li><a href=\"https:\/\/www2.stockmarketwatch.com\/learn\/financial-concepts-diversification\/\">03) Financial Concepts:  Diversification<\/a><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Now let us review the key points of this tutorial: The risk\/return tradeoff is achieving a balance between the desire [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center 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