Evidence from the 50-year period from 1950 to 1999 indicates that returns and risk (as measured by the standard deviation of returns)are positively related.

Question

Quizplus · Accepted Answer

The statement is true. Studies have shown that higher returns are usually accompanied by higher risk, as measured by the standard deviation of returns. This relationship is known as the risk-return tradeoff, and it is a fundamental principle of modern finance. It means that investors who are willing to take on more risk can potentially earn higher returns, but they also face greater uncertainty and the possibility of larger losses.

Evidence from the 50-Year Period from 1950 to 1999 Indicates