In the financial world, it is often mentioned that with investments, the higher the risk, the higher


Question:

In the financial world, it is often mentioned that with investments, the higher the risk, the higher the return. In many cases, the risk associated with an investment is measured by the variability of the returns provided by the investment. The data regarding annual percentage returns by two investment options over a ten year period is shown below:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Investment A 8.3 -6.2 20.9 -2.7 33.6 42.9 24.4 5.2 3.1 30.5
Investment B 12.1 -2.8 6.4 12.2 27.8 25.3 18.2 10.7 -1.3 11.4

Does the data support the statement about higher risk being associated with higher returns? Explain.

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