In securities markets,there should be a risk-return trade-off with higher-risk assets having _________ expected returns than lower-risk assets.

Question

Quizplus · Accepted Answer

According to modern portfolio theory, which is widely accepted in securities markets, higher-risk assets are expected to have higher expected returns compared to lower-risk assets. This is because investors demand compensation for taking on the higher risk. Therefore, the risk-return trade-off is positive, and the answer is (A) higher.

In Securities Markets,there Should Be a Risk-Return Trade-Off with Higher-Risk