The Rate of Return of Certain Investments Increases as the Risk

Multiple Choice

The rate of return of certain investments increases as the risk factor of the investment increases. An investment with a risk factor of 2 has a rate of return of 5.0%. An investment with a risk factor of 24 has a rate of return of
12) 0%. What is the average rate of return per unit of risk?

A) 3.14% per unit risk
B) 1.90% per unit risk
C) 0.53% per unit risk
D) 0.32% per unit risk