What Is the Risk-Return Trade-Off

question 161

Multiple Choice

What is the risk-return trade-off?

• A) Assets with the least risk tend to outperform the market.
• B) To invest in less risky assets means higher returns.
• C) Bonds earn higher returns than stocks because bonds are riskier.
• D) To earn higher rates of return, a person must accept higher risk.

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Definitions:

Gardner

Refers to Howard Gardner, an American developmental psychologist best known for his theory of multiple intelligences.

Charles Spearman

A British psychologist known for his work in statistics and intelligence, especially for Spearman's rank correlation coefficient and the concept of 'g' or general intelligence.

General Intelligence

A concept suggesting that individuals possess a single, overall measure of mental capability that affects performance on different cognitive tasks.

WAIS-IV

The Wechsler Adult Intelligence Scale-Fourth Edition, a widely used test designed to measure intelligence and cognitive ability in adults.