What is the relationship between risk and return in financial management?a.Higher risk is always associated with higher returnb.Lower risk is always associated with higher returnc.Risk and return are not related in financial managementd.Risk and return are inversely related in financial managementClear my choice
Question
What is the relationship between risk and return in financial management?a.Higher risk is always associated with higher returnb.Lower risk is always associated with higher returnc.Risk and return are not related in financial managementd.Risk and return are inversely related in financial managementClear my choice
Solution
The relationship between risk and return in financial management is that higher risk is generally associated with the potential for higher return. This is because investments that come with a higher degree of risk are often those that have the potential for higher returns. This is due to the fact that investors require a higher return to compensate for taking on more risk. However, it's important to note that while this relationship generally holds true, it's not a guarantee - a higher risk investment could also lead to higher losses. So, the correct answer is a. Higher risk is always associated with higher return.
Similar Questions
What is risk-return analysis in financial management?a.Assessing the potential risks and rewards of an investmentb.Analyzing the historical performance of a company's stockc.Evaluating the impact of inflation on investment returnsd.Determining the optimal debt-equity ratio for a firm
Which of the following is true about risk and return? aRiskier assets will, on average, earn lower returns. bIn general, the greater the risk, the greater the required reward. cBased on historical data, there is no reward for bearing risk. d
Which of the following is NOT a component of risk-return analysis?a.Assessing the potential risks of an investmentb.Evaluating the potential returns of an investmentc.Calculating the average market returnd.Analyzing the historical performance of similar investments
n investment terms, what does "risk-adjusted return" refer to?Question 5AnswerA.The return earned from high-risk investmentsB.The return earned relative to the risk takenC.The return earned without considering any risksD.The return earned from low-risk investments
In financial management, risk refers to:a.Uncertainty and potential lossb.The amount of debt a company hasc.The rate of return on an investmentd.The value of assets owned by a companyClear my choice
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.