Multiple choice

Greater returns come only from assuring higher risks, and a higher risk portfolio guarantees higher returns.

  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The statement contains two claims: (1) Greater returns come only from higher risks - this is generally true as risk and return are positively correlated. (2) Higher risk portfolios guarantee higher returns - this is FALSE. Taking higher risk increases the potential for higher returns, but it does NOT guarantee them. High-risk investments can result in significant losses. The second clause makes the overall statement false, so Option B is the correct answer.