Investment basics · Question 1 of 12
What is the basic relationship between the expected return and the risk of an investment?
1 answer is correct. Easy
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Answer
- C Higher expected returns usually come with higher risks
Explanation
Investors demand compensation in the form of higher expected income for taking on risks. That is why shares yield more than overnight deposits on average over the long term, but fluctuate much more. Anyone promising a high return without risk deserves suspicion.