Please help I am taking a final right now What is riskreturn

Please help I am taking a final right now.

What is risk-return tradeoff?

Solution

\"Higher the risk, greater the return\"

Risk-return tradeoff means the return potential in an investment option is directlty proportionate with the risk involved in the project. The greater is the risk involved in the investment, the higher is the probability of earning higher returns from the investment. The lower the risk involved, or say the safer is the investment the lower is the return from the investment. This tradeoff that investor faces between risk and return while considering investment decisions is called risk return tradeoff.