Which statement describes the relationship between risk and return? A. Higher risk often leads to lower potential returns. B. Higher risk often leads to higher potential returns. C. Lower risk often leads to higher potential returns. D. Moderate risk often leads to the highest potential returns.

When one makes an investment there exists a risk to lose he amount invested, when one takes higher risk they are more likely to `lose said investment. In order to compensate for the greater risk one faces with respect to their investment there is a higher potential return obtained from that investment.

Thus, Higher risk often leads to higher potential returns

ewomazinoade ewomazinoade · Answer 2 · 2022-05-23T12:10:43+02:00

The relationship between risk and return is higher risk often leads to higher potential returns.

Which is the relationship between risk and return?

When the risk of an investment is high, investors would demand an higher rate of return in exchange for the high rate of risk.

In the capital asset pricing model, the higher the risk of an investment, the higher the beta would be. The higher beta is, the higher the rate of return on the investment.

To learn more about risk, please check: https://brainly.com/question/17007831

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