Question

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.

Answer 1

Answer is B ; got it right on USA test prep

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.