Generally, an increase in risk will result in ________.
A) a lower required return or interest rate
B) a higher required return or interest rate
C) a higher return on investment
D) a lower return on investment

Question

Quizplus · Accepted Answer

An increase in risk will result in a higher required return or interest rate. This is because investors demand compensation for taking on additional risk, which is reflected in the form of a higher required return. Alternatively, if there is less risk involved in an investment, investors may be willing to accept a lower return, resulting in a lower required return or interest rate.

Generally, an Increase in Risk Will Result in ________