Your friend Lily took a finance class and learned about the risk-return trade-off. Wanting a high return, Lily invested in a risky, start-up technology company. A year later the company went bankrupt and Lily lost her entire investment. Lily is furious with her finance teacher for misleading her, claiming she was taught that higher return goes with higher risk. Explain how Lily misinterpreted the risk-return trade-off. (5 marks)

Explanation in details