Question

The financial risk-return principle (risk apathetic) indicates: a) the higher the risk, the greater the amount of financial assets b) to greater yield (return) greater amount of debt c) take additional risk if the projected change in return will be greater. d) I will not take additional risk unless there is less profit

Answer 1

Financial risk return principle always advocate that that should always be a trade off between risk and return, as higher the risk, the higher the reward.

Higher return can only be made by those investors who are willing to accept higher rate of risk.

Rest of the options state otherwise as they states about debt and financial assets with risk so they are false.

Correct answer is option ( C) take additional risk if the projected change in return will be greater.