Question
Stocks offer little rewards because they are not risky. True False
Answer
4.1
(175 Votes)
Tilly
Veteran · Tutor for 12 years
Answer
False
Explanation
Generally, the level of return on an investment correlates directly with its level of risk. Stocks are considered a riskier type of investment because their value can fluctuate dramatically in short periods, leading to potential high profits or losses. To compensate for this risk, stocks have the potential to provide significant returns over the long term if the company performs favorably. Thus, this statement is incorrect when it indicates that stocks offer little rewards because they are not risky. Due to the intrinsic risk involved in holding shares, stocks offer the potential for substantial returns (or "rewards") to investors who are willing to tolerate this level of risk.