The "risk/return" trade-off means
A) using various techniques to manage risks.
B) the market demands a greater return when there is greater risk.
C) not investing in a risky business.
D) monitoring risks.

Question

Quizplus · Accepted Answer

The risk/return trade-off means that investors will demand a greater return for investments that are perceived as riskier. In other words, investors are willing to take on more risk only if they feel they will be compensated with a higher return. This is why stocks, which have higher risk, generally have a higher expected return compared to safer investments like bonds or CDs.

The "Risk/return" Trade-Off Means