Why,in general,do investment opportunities offer a rate greater than that offered by Government of Canada securities for the same horizon?
A)Most investment opportunities offer far greater risk than those offered by Government of Canada.
B)The return from Government of Canada securities generally attracts less tax than the returns from other investments.
C)The opportunity cost of capital for a given horizon is generally based on Government of Canada securities with that same horizon.
D)Government of Canada securities are generally considered to be the best alternative to most investments.
E)Government of Canada securities are the least attractive investment available.

Question

Quizplus · Accepted Answer

Investment opportunities typically offer a higher rate of return because they come with higher risk than Government of Canada securities, which are considered low-risk investments. Investors require compensation for taking on more risk, hence the higher return offered by investment opportunities.

Why,in General,do Investment Opportunities Offer a Rate Greater Than That