Answer :
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The BEST statement that describes the relationship between risk and return in investments is:
"Investors expect to earn a higher return when they invest in a high risk asset."
Here's why:
1. Risk and return are closely related in investing. Generally, the higher the risk associated with an investment, the higher the potential return investors expect to receive.
2. High-risk investments such as stocks of emerging companies or speculative ventures have the potential for significant returns, but they also come with a higher chance of losing money.
3. On the other hand, low-risk investments like government bonds or savings accounts offer lower returns, but they are less likely to result in significant losses.
In summary, investors expect a higher return when they take on higher risk in their investments. It's important to consider your risk tolerance and investment goals when choosing where to invest your money.
The BEST statement that describes the relationship between risk and return in investments is:
"Investors expect to earn a higher return when they invest in a high risk asset."
Here's why:
1. Risk and return are closely related in investing. Generally, the higher the risk associated with an investment, the higher the potential return investors expect to receive.
2. High-risk investments such as stocks of emerging companies or speculative ventures have the potential for significant returns, but they also come with a higher chance of losing money.
3. On the other hand, low-risk investments like government bonds or savings accounts offer lower returns, but they are less likely to result in significant losses.
In summary, investors expect a higher return when they take on higher risk in their investments. It's important to consider your risk tolerance and investment goals when choosing where to invest your money.
