Which of the following statements about risk is true?
A) The higher the risk, the higher the expected return.
B) The higher the risk, the lower the expected return.
C) The lower the risk, the greater the maturity value of the investment.
D) The higher the risk, the lower the maturity value of the investment.
E) The higher the risk, the lower the risk-free rate.

Question

Quizplus · Accepted Answer

This statement is known as the risk-return tradeoff, where higher risk investments are expected to provide higher returns. This is because investors demand compensation for taking on additional risk.

Which of the Following Statements About Risk Is True