The Figure Given Below Shows the Demand Curves [D₁ and D₂]

The figure given below shows the demand curves [D₁ and D₂] and the supply curve [S₁] of capital.Figure 17.1

-A pervasive tradeoff in financial markets relates risk to expected returns. Which of the following statements reflects this relationship?

A) The higher the risk of an asset, the lower the expected return on the asset.
B) There is usually no relationship between risk and return.
C) The higher the risk of an asset, the higher the expected return on the asset.
D) The return on an asset is normally positively related to the risk of comparable assets.
E) The return on a risky asset cannot be compared with the return on a risk free asset.

Correct Answer:

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