Which is consistent with the no free lunch principle?
A) Risk and return are unrelated in financial investment.
B) An asset that brings higher returns must come with higher risk.
C) The best way to get rich is to invest in stocks.
D) Investing in U.S. Treasury bills is the best advice in personal finance.

Question

Quizplus · Accepted Answer

The no free lunch principle states that there is no one perfect solution or strategy that will work in all situations. Choice B is consistent with this principle because it acknowledges that higher returns come with higher risk, and there is no one-size-fits-all approach to investment. Choices A, C, and D all make absolute claims about financial investment, which goes against the no free lunch principle.

Which Is Consistent with the No Free Lunch Principle