5
QuizMultiple Choice

Investment Strategies

Question 5 • ***CPS Online Personal Finance fall – 3-2027

Which statement is true of the relationship between risk and return?

Answer
A
The greater the risk, the greater the potential return.
B
The relationship between risk and return is always the same.
C
The greater the risk, the lower the potential return.
D
The relationship depends on the individual investment.

Explanation

In general, investors expect a higher potential return for taking on greater risk. A riskier investment may earn more, but it also has a greater chance of losing value. So the true statement is “The greater the risk, the greater the potential return.”

AI-written and checked against the verified answer.

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