Asked by Montonya Boozier on May 06, 2024
Verified
To accept higher levels of risk, investors must be paid a higher risk premium.
Risk Premium
The additional return expected by an investor for holding a riskier asset compared to a risk-free asset.
Risk Levels
The degree to which an investor or business is exposed to potential financial loss or gains.
- Contrast the concepts of risk and return.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
True
Explanation :
Investors demand a higher risk premium as compensation for accepting higher levels of risk, reflecting the increased uncertainty of receiving the expected return on their investment.
Learning Objectives
- Contrast the concepts of risk and return.
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