1. Risk and return are key determinants in share price. Increased risk, other things remaining constant, results in:

Question

Caesar

Business

12 May, 04:38

1. Risk and return are key determinants in share price. Increased risk, other things remaining constant, results in:

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Answers (1)

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Lincoln Acevedo · Answer 1

Lower share price

Explanation:

Risk mostly related to the financial asset which refers as the unexpected changes in the security price. On the other hand, return refers to the earnings received by the investor by taking risk. There is a positive relationship between the risk and return. We know that financial assets with higher risk are generally have lower share price. This would conclude that higher return one can get from lower share price because risk associated with it, is higher.