How is the potential rate of return on investments related to the level of risk?
a) there are risks and benefits to all investments.
b) higher risk investments have a higher potential return.
c) the rate of return can depend on fees, tax deferrals, and exemptions.
d) risky investments have a lower rate of return than more stable investments.

The correct answer is letter B.

Explanation: The return on investment should be commensurate with the risk involved. Risk is a measure of the volatility of future earnings returns.

Volatility is a quantity of fluctuations that occur with a series of numbers when they deviate from a representative series.

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