DEPENDENCE OF RISK AND PROFITABILITY OF FINANCIAL INSTRUMENTS ON TIME HORIZON OF INVESTMENT

N. I. Berzon ()

University Management: Practice and Analysis, issue 3

Abstract: This article is about the questions of evaluation of risk and profitability at investment in the financial market. The classical approaches to the risk assessment of the most popular financial instruments: stocks and bonds were considered in this work. The rates describing the volatility of the financial instrument were used in order to quantify the risk of the instrument. In a short time horizon the volatility of stock is considerably higher than the volatility of bond and it makes the stock more risky finanacial instrument than bond. When the time horizon increases the volatility of stock considerably goes down. The analysis of American and Russian markets shows, that the stock is more preferable object of an investment when the time horizon increases.

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