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What are some common investment strategies, and how do investors assess risk and return when making investment decisions?

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Some common investment strategies include:

  1. Diversification: Spreading investments across different asset classes to reduce risk.
  2. Buy and Hold: Investing in securities for the long term without frequent trading.
  3. Value Investing: Buying undervalued securities with the potential for long-term growth.

Investors assess risk and return by considering factors such as:

  • Volatility: Measure of how much the return on an investment can vary over time.
  • Historical Performance: Looking at past performance to predict future returns.
  • Market Conditions: Evaluating economic indicators and trends that may affect investments.
  • Risk Tolerance: Understanding how much risk an investor is willing to take on for potential returns.
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