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One of the causes of the recent financial crisis in the United States has been excessive risk taking due to underestimation of risk. How does

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One of the causes of the recent financial crisis in the United States has been excessive risk taking due to underestimation of risk. How does this relate to financial leverage? Can overestimation of risk also be detrimental? Your friend Ricky took a finance class and learned about the risk/return tradeoff. Wanting a high invested in a risky, start-up technology company. A year later the company went bankrupt and Rick entire investment. Ricky is furious with his finance professor for misleading him, claiming he was higher return goes with higher risk. Explain how Ricky misinterpreted the risk/return tradeoff

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