Which of the following statements best describes the relationship between risk and the average expected return of investments?
A) Less risky assets will have similar average expected rates of return to more risky assets.
B) Less risky assets will have higher average expected rates of return than more risky assets.
C) More risky assets will have higher average expected rates of return than less risky assets.
D) More risky assets will have lower average expected rates of return than less risky assets.

Question

Quizplus · Accepted Answer

According to the theory of risk and return, more risky assets tend to have higher average expected rates of return compared to less risky assets. This is because investors demand a higher return for taking on greater risk. While less risky assets may offer some degree of safety, they generally don't provide as much potential for returns as more risky assets.

Which of the Following Statements Best Describes the Relationship Between