Underlying all investments is the trade-off between_________.

expected return and actual return
low risk and high risk
actual return and high risk
expected return and risk

The correct answer is D. expected return and risk.

All investments involve some degree of risk. The higher the potential return, the higher the risk. This is because investments with higher potential returns are more volatile, meaning that their prices can go up and down more sharply. Investors must decide how much risk they are willing to take in order to achieve their investment goals.

Option A is incorrect because actual return is not always equal to expected return. The actual return on an investment can be higher or lower than the expected return, depending on a variety of factors, such as market conditions.

Option B is incorrect because low risk does not always mean low return. There are some investments that have low risk but also low potential return. For example, a savings account is a very low-risk investment, but it also has a very low potential return.

Option C is incorrect because actual return is not always equal to high risk. The actual return on an investment can be higher or lower than the expected return, depending on a variety of factors, such as market conditions.

Exit mobile version