The basic trade-off in the investment process is
A) between the anticipated rate of return for a given investment instrument and its degree of risk.
B) between understanding the nature of a particular investment and having the opportunity to purchase it.
C) between high returns available on single instruments and the diversification of instruments into a portfolio.
D) between the desired level of investment and possessing the resources necessary to carry it out.

Question

Quizplus · Accepted Answer

The basic trade-off in the investment process is between the anticipated rate of return for a given investment instrument and its degree of risk. This means that investors need to assess the potential returns of an investment and the likelihood of losing money, and make a decision based on their risk tolerance and investment objectives. The higher the potential return, the higher the risk, and investors need to balance these factors to make informed investment decisions.

The Basic Trade-Off in the Investment Process Is