For the risk-return principle implies that the more risky a given course of action, the higher the expected return must be.

Question

Quizplus · Accepted Answer

The risk-return principle states that there is a direct relationship between risk and return. In order to compensate for higher levels of risk, investors demand higher expected returns. Therefore, the more risky a given course of action, the higher the expected return must be.

For the Risk-Return Principle Implies That the More Risky a Given