The potential return of any investment should be directly related to the risk that the investor assumes.

Name: The potential return of any investment should be directly related to the risk that the investor assumes.
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Question

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This is a fundamental principle of investing known as the risk-return tradeoff. The higher the potential return of an investment, the higher the risk an investor must assume. Similarly, lower risk investments typically offer lower potential returns.

The Potential Return of Any Investment Should Be Directly Related