Question 8 • (Galli)WCA 2221 Civics/Economics 1st nine weeks 26-27
Which statements describe the role of risk in making investment decisions? Check all that apply.When discussing investments, “risk” is the possibility of little or no return.Risk is an element to consider when investing in stocks.Low risks typically have high returns.The higher an investment’s risk, the greater its potential return will be.When making an investment, profits are always guaranteed.
Answer
A
When discussing investments, “risk” is the possibility of little or no return.
B
Risk is an element to consider when investing in stocks.
C
Low risks typically have high returns.
D
The higher an investment’s risk, the greater its potential return will be.
E
When making an investment, profits are always guaranteed.
Explanation
Investment risk is the possibility that an investment will earn little or nothing, so it is important to consider when investing in stocks. In general, higher risk can bring a greater potential return, but it does not guarantee that return. Low-risk investments do not typically have high returns, and investment profits are never guaranteed.
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