Argue for or against the earning potential vs. risk of investing in a certain kind of stock.

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Preliminary

In the argument of either an investor to invest in a stock of a given company or not is really a controversial issue , in which an investor has to make a choice between a range of assets that ca be held in place of stock . The investor 's decision to invest in a certain asset , where stock is an example of assets involves a rational consideration of various assets depending on the assets ' risk in investing in them and also the returns

of respective assets . The other investment opportunities other than stock include holding of bank accounts that bear interest rate investing in capital good which are certain to bear interests , and also investing in appreciating assets like land among other assets . In quite a quick look , investing in stock might seem to be a good investment , but in the real sense it 's never true as it is vulnerable to many externalities which are certain to make it a risky investment despite its returns . The term risk is used in the essay to explain the tendency of the true value of the stock fluctuating from the expected future values of stock , therefore it can be perceived as a measure for accurate predicting of the stock value in the future . The s will try to look at these hidden risks that are inherent in stocks as a choice of investment . The also considers the opportunity cost , that is the benefits that are forgone by investing in stock which could have been attained by investing in the alternative assets implying returns analysis before making a choice . The starts from the analysis of the factors which influence the investors to invest in stock and mainly on the factors which influence expectations , because investors normally invest in stock expecting that their values will rise in the near future to either earn increased dividends or sell the stock held at a profits and later the looks at some other factors including monetary policy and government policies among other factors which are certain to influence the stock values of various companies

Investors are always in consideration of various investment opportunities that are at their reach , where they tend to invest in opportunities that are more rewarding compared to the others and also considering the risk inherent in these various investment opportunities The investment opportunity taken by an investor depends so much on the returns of the investments and the risks , but on matters of considering risk as a factor of determining the kind of investment opportunity adapted , it varies from one investor to the other depending on whether the investor is risk averse , risk neutral or risk loving . Risk averse investors do not invest in opportunities where there are risks , the risk neutral investors invest in any opportunity without considering the risks inherent in the opportunity in as far as it hits his or her returns target and the risk loving investors normally invest in opportunities...