between what risk and return mean. Yes, a high-risk investment might have a low return, but it might also

have a high return. Risk refers to the fact that a wide range of outcomes is possible. However, a high-risk

investment must, on average, expect a relatively high return or else no one would be willing to take the

risk. Thus, it is quite possible—even likely—for an investment to have high risk and high return. Indeed,

the reason that an investment has a high expected return is that it also has a high risk.

6. Principal + (principal × rate × time)

$5,000 + ($5,000 × 0.06 × 3) = $5,900

7. Principal + (principal × rate × time); Interest = Principal × rate × time; $500 = $10,000 × rate × 5 years;

$500 = $50,000 × rate; $500/$50,000 = rate; Rate = 1%

8. Principal(1 + interest rate)time = $1,000(1+0.02)5 =$1,104.08

Chapter 18

1. All other things being equal, voter turnout should increase as the cost of casting an informed vote

Access for free at openstax.org
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decreases.
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