Question

Investors are often presented with risky investment opportunities. While high risk is typically avoided by savvy investors, which of the following would the ideal risky investment offer?(1 point)
Responses

higher returns and higher liquidity than other investments
higher returns and higher liquidity than other investments

higher returns and lower liquidity than other investments
higher returns and lower liquidity than other investments

lower returns and lower liquidity than other investments
lower returns and lower liquidity than other investments

lower returns and higher liquidity than other investments

Answer 1

The ideal risky investment would offer **higher returns and lower liquidity than other investments**. Investors are typically compensated for taking on higher risk with the potential for higher returns, while lower liquidity may be acceptable in exchange for the higher returns associated with the riskier investment.