Final answer:
A house tends to be a risky asset because it represents a large fraction of your overall wealth, causing a lower rate of return. The rule of 70 states that if the annual rate of return of an investment is x percent, it will take 70/x years for the value of the investment to double. The risk-return tradeoff means higher returns come at the price of higher risk.
option c is the correct
Step-by-step explanation:
The first statement is true. A house tends to be a risky asset because it represents a large fraction of your overall wealth. This fact would cause us to expect that the rate of return on a house should be lower, all else equal. Since a house is a major investment, any fluctuations in its value can have a significant impact on your overall wealth.
The second statement is also true. The rule of 70 states that if the annual rate of return of an investment is x percent, it will take 70/x years for the value of the investment to double. This rule is commonly used to estimate how long it will take for an investment to double in value.
The third statement is true as well. The risk-return tradeoff means that higher returns usually come at the price of higher risk. This means that investments with high potential returns, like stocks, tend to come with higher levels of risk. On the other hand, investments with lower risk, like bank accounts, usually offer lower returns.