One fundamental concept in ﬁnancial economics is that an investment's rate of return is
A) positively related to the price paid for it.
B) inversely related to the price paid for it.
C) inversely related to the riskiness of the investment.
D) inversely related to the maturity of the investment.

Question

Quizplus · Accepted Answer

The rate of return on an investment is inversely related to the price paid for it because if you pay more for an investment, all else being equal, the yield (or rate of return) you will get from that investment will be lower.

One Fundamental Concept in ﬁNancial Economics Is That an Investment's