The risk-return trade-off is an example of:
A) the sunk cost principle.
B) the no free lunch principle.
C) the capitalist principle.
D) the inelastic principle.

Question

Quizplus · Accepted Answer

The risk-return trade-off is a fundamental principle in finance that states that in order to achieve higher returns, an investor must be willing to take on higher levels of risk. This concept is closely related to the "no free lunch" principle, which states that it is not possible to achieve higher returns without taking on some level of risk. Therefore, the best choice is B, the "no free lunch" principle.

The Risk-Return Trade-Off Is an Example Of