the higher the risk the higher the returns explain?
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the higher the risk the higher the returns explain?
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Explanation:
The statement "the higher the risk, the higher the returns" is a general principle in investing. It means that investments that have a higher potential for loss also have a higher potential for gain. This is because investors typically require a higher rate of return to compensate them for taking on a higher level of risk. For example, a stock in a new, unproven company carries a higher level of risk than a stock in a well-established company, and therefore, investors would expect a higher rate of return on the stock in the new company to compensate them for the additional risk.