Which of the following is true of risk and expected returns? If two investments have the same expected return, investors prefer
the riskier alternative. The expected return on an investment is independent of the associated risk. Higher the risk, higher the expected returns on an investment. The expected return on an investment is inversely proportional to the associated risk.
Higher the risk, higher the expected returns on an investment.
Explanation:
Generally speaking when investments are made the higher the risk, the higher the returns, and also the lower the risk the lower the returns.
For example shares are a low risk investment and they have low returns mostly in cents to the dollar.
However an investment like trading speculatively in the forex market has high returns where you can double or triple investment. Investors are also likely to lose all invested capital.
The attitude of others refers to how much can another person´s attitude reduce what someone else prefers to buy. The extent of how much can a third party influence our purchasing decisions is based on:
How intense is the third party´s negative attitude toward buying that specific product.
How motivated we are to comply with the other person´s attitude.
