PRC-3 · Chapter 4 · Question 25 of 65
In financial management, the principle that investors demand higher compensation for undertaking highly uncertain investments is known as the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Risk-return trade-off
Explanation
The risk-return trade-off dictates that the potential return on an investment must increase as the level of risk associated with it increases.
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