In the context of investments in securities, export-import businesses typically face which type of risk and return profile?

• A. Low risk and low return because of stable domestic operations
• B. High risk and potentially high return due to exposure to foreign markets and currency fluctuations
• C. Moderate risk and fixed return regardless of market conditions
• D. No risk and guaranteed return due to government protection

Answer: (B)

Verified step by step guidance

1. Understand the context of investments in securities for export-import businesses, which involves exposure to foreign markets and currency fluctuations.
2. Recognize that foreign markets can be volatile, leading to a higher risk profile for businesses operating internationally.
3. Consider the potential for high returns due to opportunities in diverse and growing international markets, which often accompany higher risks.
4. Evaluate the impact of currency fluctuations, which can amplify both risks and returns for export-import businesses.
5. Conclude that the risk and return profile for export-import businesses is typically characterized as high risk and potentially high return due to the factors mentioned above.