The correlation between an asset's real rate of return and its risk (as measured by its standard deviation) is usually:
A) positive.
B) strictly linear.
C) flat.
D) negative.
E) chaotic.

Question

Quizplus · Accepted Answer

Typically, the correlation between an asset's real rate of return and its risk (as measured by its standard deviation) is positive. This means that as the level of risk increases, the expected return on the asset also increases. This positive correlation is referred to as the risk-return tradeoff.

The Correlation Between an Asset's Real Rate of Return and Its