How is the potential rate of return on investments related to the level of risk?

A) There are risks and benefits to all investments.

B) Higher risk investments have a higher potential return.

C) The rate of return can depend on fees, tax deferrals, and exemptions.

D) Risky investments have a lower rate of return than more stable investments.

Question

Social Studies

Karson Swanson

Today, 13:46

How is the potential rate of return on investments related to the level of risk?

A) There are risks and benefits to all investments.

B) Higher risk investments have a higher potential return.

C) The rate of return can depend on fees, tax deferrals, and exemptions.

D) Risky investments have a lower rate of return than more stable investments.

+2

Answers (2)

Know the Answer?

Juliette Brandt · Answer 1

Answer is B; got it right on USA test prep

Daffodil · Answer 2

The correct answer is letter B.

Explanation: The return on investment should be commensurate with the risk involved. Risk is a measure of the volatility of future earnings returns.

Volatility is a quantity of fluctuations that occur with a series of numbers when they deviate from a representative series.