Which statement describes the relationship between risk and return? A. Higher risk often leads to lower potential returns. B. Higher risk often leads to higher potential returns. C. Lower risk often leads to higher potential returns. D. Moderate risk often leads to the highest potential returns.

Question

Mathematics

Kaitlin

8 December, 02:05

Which statement describes the relationship between risk and return? A. Higher risk often leads to lower potential returns. B. Higher risk often leads to higher potential returns. C. Lower risk often leads to higher potential returns. D. Moderate risk often leads to the highest potential returns.

+2

Answers (1)

Know the Answer?

Brooks · Answer 1

B. Higher risk often leads to higher potential returns

Step-by-step explanation:

When one makes an investment there exists a risk to lose he amount invested, when one takes higher risk they are more likely to 'lose said investment. In order to compensate for the greater risk one faces with respect to their investment there is a higher potential return obtained from that investment.

Thus, Higher risk often leads to higher potential returns