What is the risk-return trade-off?

Question

Quizplus · Accepted Answer

The risk-return trade-off refers to the balancing of gain with risk. This means that higher potential returns generally come with a higher level of risk. Therefore, investors must weigh the potential returns against the potential risk before making investment decisions. Choosing investments with a higher risk-return trade-off may result in higher returns but also comes with greater risk. Therefore, the best choice is to strike a balance between risk and return that aligns with a particular investor's risk tolerance and investment goals.

What Is the Risk-Return Trade-Off