The textbook uses the "no free lunch principle" in financial investment to indicate that:
A) investment opportunities with high expected returns come with higher risk.
B) investment opportunities with high expected returns come with lower risk.
C) there is no relationship between risk and expected returns.
D) there is always risk in holding any investment opportunity.

Question

Quizplus · Accepted Answer

The "no free lunch principle" states that there is no investment that provides both high expected returns and low risk, meaning that investment opportunities with high expected returns come with higher risk. Therefore, the best choice is A.

The Textbook Uses the "No Free Lunch Principle" in Financial