Samuelson's Theory of Finance

Samuelson's Theory of Finance emphasizes the importance of understanding risk and return when making investment decisions. It suggests that investors seek to maximize their expected returns while managing the uncertainty associated with those returns. The theory incorporates principles like diversification, which spreads investments to reduce risk, and the efficient market hypothesis, which argues that asset prices reflect all available information. Overall, Samuelson's framework helps explain how investors balance the desire for profit with the need to manage potential losses, guiding optimal investment strategies in a rational and systematic manner.