Q11

We run a regression with Return on the left-hand side and Risk on the right-hand side of the regression equation, along with a bunch of control variables on the right-hand side. We find a positive and statistically significant coefficient of Risk. What does this mean?

The higher the return, the higher the risk

The higher the risk, the lower the return

The lower the return, the higher the risk.

The lower the risk, the lower the return.