Which of the following is true of risk?
A) Risk and return are inversely proportionate to each other.
B) Higher the risk associated with a security the lower is its return.
C) Risk is a measure of the uncertainty surrounding the return that an investment will earn.
D) Riskier investments tend to have lower returns as compared to T-bills which are risk free.

Question

Quizplus · Accepted Answer

Risk is a measure of the uncertainty or variability surrounding the return that an investment will earn. The higher the uncertainty or variability, the higher the risk associated with the investment. Risk and return are not necessarily inversely related, and higher risk can sometimes lead to higher returns. The relationship between risk and return depends on various factors, such as market conditions and the specific investment. Thus options A, B, and D are not true statements about risk.

Which of the Following Is True of Risk