The return from holding an investment over some period of time is simply any cash payments received due to ownership, plus the change in market price usually expressed as a percent of the beginning market price of the investment.
Return comes to you mainly from two sources – income or dividend plus any price appreciation (capital gain or loss) Dt + ( Pt – Pt-1) R = Pt-1
Suppose, you buy for Tk. 100 a security that would pay Tk. 7 in cash to you and be worth Tk. 106 one year later. This return would be (7 +6)/ 100 = 13%.

Risk can be defined as the variability of return from those that are expected. In financial decisions it is often helpful to have an objective measure of risk. The main reason for having measuring of risk is to enable us to make better decisions. To be useful, a risk measure should enable us to rank alternative risky ventures. If there are two possibilities being analyzed, A and B, it is often important to know whether A is riskier than B or not. A good measure of risk should also tell us how much more risky A is than B. Is A twice as risky or ten times as risky as B? Is risky at all?

Risk measurement procedures are usually based on a particular method of organizing financial problem -through probability distribution. (A set of possible values that a random variable can assume and their associated probabilities of occurrence.)

Suppose you are thinking about purchasing stock A, which has a current price of Tk.100 per share and pays no dividends. If you buy it, you plan to sell the stock one year from now. The return you will get when you sell depends only on the price of the stock at the time you sell. You therefore want to consider what price the stock might sell for in a year. You decide there is no chance that the stock will sell for less than Tk.80 per share or more than Tk.160 per