Any action taken by the financial manager that increases risk will also increase the required return.

Name: Any action taken by the financial manager that increases risk will also increase the required return.
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Question

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This is a fundamental principle in finance known as the risk-return tradeoff. Investors demand a higher return for taking on higher levels of risk. Financial managers must consider this relationship when making investment or financing decisions that may impact the level of risk in the company.

Any Action Taken by the Financial Manager That Increases Risk