Risk vs. Return- The principle that potential return rises with an increase in risk. Diversification - A risk management technique that mixes a wide variety of investments within a portfolio. Dollar Cost Averaging - A wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period. Asset Allocation - Balance risk versus reward by adjusting the percentage of each asset. Random Walk Theory - Stock market prices evolve according to a random walk and thus cannot be predicted. Efficient Market Hypothesis - States that asset prices fully reflect all available information. The Optimal Portfolio - Portfolio in which the risk-reward combination is such that it yields the maximum returns. Capital Asset Pricing Model - Used to calculate the required rate of return for any risky asset.