Question

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

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.

Answer 1

The correct statement is:

A: The greater the risk, the greater the potential return.

This statement reflects the general principle in finance that investors expect to receive higher returns for taking on higher levels of risk.