Which two of the following would be a calculated risk for Keith's business?
Select two answers - Edexcel - GCSE Business - Question 19 - 2018 - Paper 1
Question 19
Which two of the following would be a calculated risk for Keith's business?
Select two answers.
A) Keith has calculated that his Value Added Tax (VAT) will be £2 35... show full transcript
Worked Solution & Example Answer:Which two of the following would be a calculated risk for Keith's business?
Select two answers - Edexcel - GCSE Business - Question 19 - 2018 - Paper 1
Step 1
A) Keith has calculated that his Value Added Tax (VAT) will be £2 350
96%
114 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
This is a numerical fact regarding VAT, not a calculated risk as it doesn't involve uncertainty or probability.
Step 2
B) His estimated costs for the second year of trading will increase by 12%
99%
104 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
Similar to A, this is an estimation of costs but does not represent an inherent risk factor; it's more about budgeting rather than calculated risk.
Step 3
C) There is a 40% possibility that his business will survive the first year
96%
101 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
This option presents a probability associated with a significant outcome (business survival), making it a calculated risk.
Step 4
D) Keith has estimated that the demand for his products will increase by 15%
98%
120 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
While demand estimates are important, they do not reflect a risk but rather an expected outcome; thus, this does not qualify as a calculated risk.
Step 5
E) There is an 80:20 chance of Keith's business failing
97%
117 rated
Only available for registered users.
Sign up now to view full answer, or log in if you already have an account!
Answer
This clearly indicates a probability tied to a negative outcome (business failing), categorizing it as a calculated risk.
