Lower risk investments are associated with higher expected rates of return.

Question

Quizplus · Accepted Answer

This statement is false. Generally, higher expected rates of return are associated with higher levels of risk. It is a basic principle of finance that investors must be compensated for taking on greater levels of risk. However, there may be some exceptions where certain lower risk investments have higher expected returns due to various market conditions or other factors.

Lower Risk Investments Are Associated with Higher Expected Rates of Return