n NISM Certifications
XXI NISM Series XXI-A
Medium

Which of the following is TRUE about the relationship between risk and return?

Practice question from NISM XXI A for PMS - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Higher risk always results in lower returns

  2. Higher risk is associated with higher potential returns

    Correct answer

  3. C

    Risk and return are unrelated

  4. D

    Lower risk guarantees higher returns

Why this is the answer

Generally, investors expect higher returns for taking on higher risks.

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NISM XXI A for PMS - Mock Test 1