Question

Investors typically consider several trade-offs when making investments. These include risk versus return, liquidity versus return, and short-term versus long-term investments. The risk vs return trade-off means that the potential to earn higher returns on an investment usually comes with a higher level of risk.

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Answer 1

Investors often weigh the trade-offs between risk and return when making investment decisions. They must decide if the possibility of earning greater returns is worth taking on a higher level of risk.