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Which one of the following is an example of a calculated risk for Paul's business? Select one answer: A - Edexcel - GCSE Business - Question 5 - 2015 - Paper 1
Question 5
Which one of the following is an example of a calculated risk for Paul's business? Select one answer: A. Sales have increased by 10% in the past 12 months B. Expe... show full transcript
Worked Solution & Example Answer:Which one of the following is an example of a calculated risk for Paul's business? Select one answer: A - Edexcel - GCSE Business - Question 5 - 2015 - Paper 1
Step 1
Select one answer:
Answer
To determine which option represents a calculated risk for Paul's business, we need to evaluate the definitions of calculated risk. A calculated risk involves understanding the potential dangers and benefits associated with a specific decision.
Now, let's examine each option:
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A. Sales have increased by 10% in the past 12 months: This represents a positive trend but does not indicate a risk.
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B. Expenses have increased by 15% in the past year: This is a cost issue rather than a risk and doesn’t involve uncertainty regarding potential outcomes.
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C. Profit for the year has decreased by 3.5%: This points to a reduction in profitability but again does not reflect a risk taken.
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D. There is a 30% chance of his business failing: This option highlights uncertainty and defines a potential risk that Paul is aware of, making it a calculated risk.
Thus, the example of a calculated risk in this context is option D.