5
lesson pretestMultiple Choice

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Question 5 • Economics

A high-risk investment is characterized by

Answer
A
lower interest and compound interest rates.
B
a smaller percentage chance of loss.
C
a greater percentage chance of loss.
D
superior prospects for short-term gains.

Explanation

Risk describes the possibility that an investment will lose value or fail to produce the expected return. A high-risk investment therefore has a greater percentage chance of loss, rather than a smaller one. The correct choice is “a greater percentage chance of loss.”

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