The basic trade-off in valuing any asset is between:
A) the amount of risk and the rate of return.
B) the rate of return and the length of the loan.
C) the amount of risk and the length of the loan.
D) the rate of return and the amount of the loan.

Question

Quizplus · Accepted Answer

The basic trade-off in valuing any asset is between the amount of risk associated with the investment and the rate of return that can be earned on the investment. Generally, assets that are higher risk will offer a higher rate of return in order to compensate investors for taking on that additional risk. Conversely, assets that are lower risk will typically offer lower rates of return. The length of the loan or the amount of the loan are not necessarily factors in this trade-off.

The Basic Trade-Off in Valuing Any Asset Is Between