Risk and Reward
This is another important concept in investing. It describes the trade-off between potential gain and potential loss from an investment. Generally speaking, the higher the risk of an investment, the higher the expected reward of an investment, and vice versa.
The video use sample in buying lottery tickets. As buying lottery tickets is a high-risk, high-reward investment, but also a low-probability, low-expectation investment.
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In this video, William Ackman, a billionaire investor and founder of Pershing Square Capital Management, explains the basics of finance and investing.
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