Answer:
A higher rate of return is a reasonable requirement.
Step-by-step explanation:
While the question leaves it unclear as to what the other options are for a return on their investment, it is likely the authors had in mind relatively safer investestments such as interest-bearing bank accounts (also insured by the FDIC), many bonds, both corporate and municipal, and in some cases, stocks that supply basic services (e.g., power), which are less likely to unexpectedly lose business. and have high dividends These "safer" investments have a track record of not losing people's money.
Riskeier stocks can make more money in a shorter period, but they also tend to be more volatile. Investors are more willing to invest if they see a higher rate of return is possible. If an entity wishes to raise capital, it is reasonable that they offer a higher rate of return to attract investors who would otherwise put the money elsewhere.