How does investment duration affect returns?

There is no relationship whatsoever
With greater duration of investment returns are larger
If the duration is larger the rate of returns is likely to be smaller
With greater duration of investment larger tax possibility is likely

The correct answer is: B. With greater duration of investment returns are larger.

This is because the longer an investment is held, the more time it has to grow. Over time, the value of an investment can increase due to a number of factors, such as dividends, interest, and capital appreciation. As a result, investors who hold their investments for a longer period of time are generally more likely to see higher returns than those who sell their investments sooner.

However, it is important to note that there is no guarantee that an investment will increase in value over time. The value of an investment can go up or down, and investors can lose money. Therefore, it is important to do your research before investing and to understand the risks involved.

Option A is incorrect because there is a relationship between investment duration and returns. Option C is incorrect because the rate of returns is not necessarily smaller with a larger duration. Option D is incorrect because larger tax possibility is not necessarily associated with a longer investment duration.

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