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Characterize the historical return, risk, and risk-return relationship of the stock, bond, and cash markets. Explain the risk-return trade-off. Assume that you are 25 years

Characterize the historical return, risk, and risk-return relationship of the stock, bond, and cash markets. Explain the risk-return trade-off.

Assume that you are 25 years old and you inherited $5,000 from your grandmother. You would like to invest the money either for your retirement in 40 years or for a vacation to Europe in two years. Would your tolerance for risk vary, depending on when you planned to use the money? Relate the risk-return trade-off to your plans for the $5,000.

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