On average and everything else held constant, an investment that can provide a $4\%$ return should attract more investment

capital from savers$/$investors than an otherwise identical investment that can generate a $12\%$ return.

For the average rational investor or saver, there is a direct, or positive, relationship between the amount of risk exhibited by a

security and the risk premium that would be required by the investor or saver.

The onset of inflation results in a loss of purchasing power when an investment pays constant cash flows.

Historical inflation rates, as opposed to expected future rates of inflation, should be used when calculating an investment's

nominal risk$-$free rate of return.