Investors choose to invest in higher risk investments because these investments offer higher
A) expected returns.
B) inflation.
C) actual returns.
D) future consumption.

Question

Quizplus · Accepted Answer

Generally, higher risk investments offer higher expected returns because investors are taking on more risk. Since there is more uncertainty and volatility associated with these investments, there is a possibility of earning higher returns than a less risky investment. However, this is not a guarantee and actual returns may be lower than expected. Inflation and future consumption are not direct reasons for choosing higher risk investments.

Investors Choose to Invest in Higher Risk Investments Because These