Answer:
a rational investor will only take on higher risk if he expects a higher return.
Explanation:
Rate of return can be defined as the percentage of interest or dividends earned on money that is invested.
In Financial accounting, a return refers to the amount of profit generated by an investor on an investment over a specific period of time.
Basically, the rate of return which is typically expressed as a percentage of the initial costs of an investment can either be a gain or a loss on an investment. Therefore, a positive rate of return on an investment over a specific period of time, simply means that an investor is making a profit (gains) while a negative rate of return on an investment over a specific period of time, indicates that the investor is running at a loss.
Hence, the rate of return is used as a long-term decision-making tool to determine whether or not an investment is worth it.
Thus, the principle of risk-return trade-off means that a rational investor will only take on higher risk if he expects a higher return.
Answer:
i do not support gwentyth paltrows company
To attract customers to their store and not their more expensive competitors?
Answer: U.S Treasury bonds
One of the main risks of investing is the risk of not getting back the amount invested. This risk is called default risk.
Income bonds, preferred stocks and subordinated debentures have default risk since there is no guarantee by the issuing companies that they will repay the principal, and interest or preferred dividends, as the case may be.
However, if an investor holds a U.S treasury bonds until maturity, the government gives a guarantee on the interest payment and principal amount. Hence the U.S treasury bonds are traditionally considered to have the least risk.
However, even U.S. treasury bonds are sensitive to inflation and interest rates.
