Question

One of the basic premises in finance is that when the risk of an investment is high, the rate of return required by the investor will be:
a. high.
b. moderate.
c. equal to short term T-bill rates.
d. low.

Answer 1

Answer:

A. High

Explanation:

When an investment is considered risky, investors would demand a high rate of return as compensation for holding a risky investment.

The required rate of return is usually higher than the short term t bills rate.

I hope my answer helps you.