A general rule in choosing among alternative investments is the greater the risk taken,the
A) lower the potential expected.
B) lower the profits expected.
C) greater the return required.
D) greater the price of the investment.

Question

Quizplus · Accepted Answer

The greater the risk taken, the higher the return required to compensate for that risk. This is because investors are assuming more uncertainty and potential for loss, so they expect to be rewarded with a higher return if their investment is successful. Therefore, the answer is C - greater return is required to compensate for the higher risk.

A General Rule in Choosing Among Alternative Investments Is the Greater