Scenario - The Whoppler Firm
The Whoppler Firm is an experienced financial specialist firm that advises thousands of clients regarding foreign investments and transactions. It takes pride in the accuracy of the financial advice that is provided to its clients and strives to increase the wealth of each participant. According to the records of the Whoppler Firm, the financial expertise of the company has saved its clients over five million dollars in the last year alone.
-Many investors seeking assistance from the Whoppler Firm wish to obtain an extra return on their investment because of a perceived higher risk involved with that particular investment. Which of the following best identifies what these investors are seeking?

Question

Quizplus · Accepted Answer

Investors seeking an extra return on their investment due to a perceived higher risk involved are seeking a risk premium. This is a higher rate of return required by an investor to compensate for the additional risk in a particular investment.

Scenario - the Whoppler Firm