Assets that offer a _____ rate of return also offer _____ liquidity.
A)higher; higher
B)lower; lower
C)higher; lower
D)There is no trade-off between rate of return and liquidity.

Question

Quizplus · Accepted Answer

This is because assets that offer a higher rate of return typically require a longer commitment of time, and hence have lower liquidity. On the other hand, assets that offer high liquidity often have lower returns. Thus, there is a trade-off between liquidity and rate of return, and the higher the rate of return, the lower the liquidity.

Assets That Offer a _____ Rate of Return Also Offer