PRC-3 · Chapter 4 · Question 9 of 65
A financial manager is evaluating two investment projects. Project A is very safe, while Project B is highly uncertain. According to the risk-return trade-off concept, what must Project B offer to be considered viable?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A higher potential return
Explanation
The risk-return trade-off dictates that higher levels of risk must be compensated with the potential for higher returns.
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