Risk-return spectrum
Understand why the risk premium: rational investors only accept higher risk if compensated by higher expected return.
In this lesson
Risk-return spectrum is part of Investing Foundations. This preview shows how investment-universe connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Today’s money mission
Imagine this situation: Rank from lowest to highest expected return (and risk): local T-bills, FGN bonds, NGX stocks, cryptocurrency.
How it works
The risk premium: rational investors only accept higher risk if compensated by higher expected return. This is why T-bills (near-zero risk) offer lower returns than stocks. The expected return differential IS the risk premium — investors are being paid to accept uncertainty.
Apply it to a real decision
Real-life money moment: Rank from lowest to highest expected return (and risk): local T-bills, FGN bonds, NGX stocks, cryptocurrency. The key lesson is: The risk-return spectrum: T-bills (government, short-term, near-certain) → FGN Bonds (government, longer-term, slightly more rate risk) → NGX Stocks (company equity, volatile, higher long-term return) → Crypto (extreme volatility, potential for large gains or total loss).
Activity preview
Apply the idea
Use the lesson to complete this short practice activity.
Try one real money action
Open Tasks and submit proof for one task, or open Requests and make a deposit request. Parent approval can happen later.
Quiz preview
Higher potential returns usually come with:
Rank from lowest to highest expected return (and risk): local T-bills, FGN bonds, NGX stocks, cryptocurrency.