The Relationship Between Risk and Return Is Positive Because

question 6

Multiple Choice

The relationship between risk and return is positive because

• A) the longer the term of the investment, the more exposed it is to negative inflation effects.
• B) investors need to be compensated with additional return on investment to bear additional risk.
• C) not every investment has risk, so there is really no distinct relationship.
• D) Both A and B are correct.

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Definitions:

Reactivity

The degree to which the process of measurement itself affects the measurement and the subject's behavior.

Social Desirability

The tendency of respondents to answer questions in a manner that will be viewed favorably by others, which can bias survey and research results.

Selection Bias

A distortion in statistical analysis resulting from the method of collecting samples, where the sample obtained is not representative of the population intended to be analyzed.

Responsiveness

The quality of reacting quickly and positively; being responsive to feedback or changes.