Explain how understanding risk and return will help you in future business ventures.

Understanding risk & return is an essential skill for anyone involved in business as it provides insights into potential outcomes of various investments & decisions. For instance – when considering whether to enter a new market, one must assess associated risks (e.g. – competition, changing regulations etc.) The expected return can be compared to the project’s viability.

Similarly – assessing returns relative to risk undertaken also helps inform pricing strategies by ensuring that goods/services are priced realistically based upon their inherent worth; thus allowing businesses attract customers willing pay fair prices for quality products rather than just attempting compete on cost alone.

Finally – understanding how different investments offer varying degrees success depending upon amount of risk taken often encourages investors seek out better opportunities they might otherwise have missed due lack experience or knowledge base: this can help diversify portfolios which may result stable cash flows over time despite fluctuations occurring during any given period.