Which of the following statements about the relationship between rate of return and risk is true?
A) A portfolio often provides a higher rate of return for a given level of risk than any individual asset can offer.
B) Individual assets typically provide higher rates of return than portfolios, given that portfolios are lower risk.
C) A portfolio often provides a higher rate of return than any other type of savings.
D) A portfolio is the safer choice and thus provides a lower rate of return than any other type of savings.

Question

Quizplus · Accepted Answer

This statement is true as a diversified portfolio can provide a higher rate of return for a given level of risk by spreading the risk across multiple assets. Investing in individual assets is riskier with the potential for higher returns but also the potential for significant losses. Additionally, a portfolio is not necessarily the safest choice, as the risk of the portfolio depends on the specific assets included and their respective risks.

Which of the Following Statements About the Relationship Between Rate