BUISENESS MANAGEMENT
RISK MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is a trade-off between risk and return when money is invested.
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The greater the risks taken, the lower the return.
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Reduce risks by being well-organized.
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None of the above
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Detailed explanation-1: -According to the risk-return tradeoff, invested money can render higher profits only if the investor will accept a higher possibility of losses.
Detailed explanation-2: -Which of the following statements are true about the relationship between risk and return when it comes to investing? When it comes to investing, risk and return have a direct relationship, in that the riskier an investment, the higher its expected return.
Detailed explanation-3: -First is the principle that risk and return are directly related. The greater the risk that an investment may lose money, the greater its potential for providing a substantial return. By the same token, the smaller the risk an investment poses, the smaller the potential return it will provide.
Detailed explanation-4: -Which of the statements below BEST describes the relationship between risk and return when considering an investment? Investors expect to earn lower return when they invest in a risky asset like a startup company.