Question

What is the relationship between return and liquidity? *

a. Investments with high liquidity have high returns.
b. Investments with low liquidity have low returns.
c. Investments with high liquidity have low returns.
d. There is no relationship between returns and liquidity

Answer 1

Generally speaking, the relationship between return and liquidity is that "a. Investments with high liquidity have high returns," although this is certainly not always the case.