The relationship between risk and return is positive because
◦ the longer the term of the investment, the more exposed it is to negative inflation effects.
◦ investors need to be compensated with additional return on investment to bear additional risk.
◦ not every investment has risk, so there is really no distinct relationship.
◦ Both the longer the term of the investment, the more exposed it is to negative inflation effects and investors need to be compensated with additional return on investment to bear additional risk are correct.