15. Risk and return - Implications for managers and investors Aa Aa The concept of risk and return is subjective for different people, as well as for corporations. Read and assess the following financial decisions. Keeping everything else constant, are the following actions good financial decisions? Base your decisions on the understanding of risk and return, solely from a theoretical finance perspective. Good Financial Decision? Bill is a small-business owner. He has some cash flow and wants to invest in a new project. Bill's assistant provides an evaluation and estimates the nominal returns that Bill would earn if he invests in the project. Bill reads the evaluation and makes the decision based on the real terms after factoring in inflation. Yes No Good Financial Decision? The technology boom in the late 1990s enticed everyone. Wilson is an average investor, and he invested all his money in technology stocks. Yes No O Good Financial Decision? Mr. and Mrs. Smith are in the middle of their investment planning, so they hire a financial planner. In their discussions with the financial planner, they include their investment timeline and the length of time that they can keep investing. This helps Mr. and Mrs. Smith come up with an investment objective and a financial plan. Yes No O