If a client has constant risk tolerance, he or she requires ______ expected returns to compensate for additional units of risk.

Question

Quizplus · Accepted Answer

If a client has constant risk tolerance, it means that the client is willing to take on a certain level of risk and is not comfortable with either too much or too little risk. In this case, to compensate for additional units of risk, the client will require higher expected returns. This is because the client is taking on more risk, which increases the likelihood of losing money, so the potential reward must be higher to make it worth the additional risk. Therefore, the best choice is C - more.

If a Client Has Constant Risk Tolerance, He or She