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Explain the risk-return relationship.
The relationship among risk and required rate of return is known as the risk-return relationship. It is a positive relationship for the reason that the more risk assumed, the higher the necessary rate of return most people will demand.
Risk aversion illustrates the positive risk-return relationship. It describes why risky junk bonds hold a higher market interest rate than essentially risk-free U.S. Treasury bonds.
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#question.economic and finanancial environment.
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