In a small business, risks and returns are common to enhance the security of the assets. There is a strong relationship between return and risk as they help to make better investment decisions. The higher the risk related to investment, the more the potential of return (Rudkin, 2007). Accountants encourage the users to utilize various financial instruments to make an investment. In such situations, they offer the guidance on potential degrees of risks and returns. This is applicable to all investments including bonds, savings account and government backed security assets.
It is a recommended practice to use financial instruments to decide the viable investment that guarantees moderate returns at negligible or no risks. This is particularly helpful when the market faces a bad turn and the buyer still has his initial principal amount safe. The accountant plays an important role when it comes to medium and long term solutions (Abreu, 2015). When the investment is highly safe, it is impossible for the buyer to cope with inflation and this will result in diminished returns. On a long term, the accountant takes the liability to give investment advices forecasting the market fluctuations and offering a way to deal with downturns in the middle.
Is it mandatory to learn risk and return?
From the analysis, it is evident that accountant plays a pivotal role in the present and future markets to make business decisions and guide the customers during market risks.