Photo AI
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) Expenses have increased by 15% in the past year C) Profit for the year has decreased by 3.5% D) There is a 30% chance of his business failing - 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) Sales have increased by 10% in the past 12 months B) Expenses have increased by 15% in the past year C) Profit for the year has decreased by 3.5% D) There is a 30% chance of his business failing - Edexcel - GCSE Business - Question 5 - 2015 - Paper 1
Step 1
D) There is a 30% chance of his business failing
Answer
In this case, option D represents a calculated risk. A calculated risk is one where the potential negative outcomes are analyzed, and there is a quantifiable probability that they might occur. The fact that there is a 30% chance of failure indicates that Paul is aware of the risks involved in his business decisions. The other options (A, B, and C) describe outcomes or changes in metrics but do not encapsulate the concept of a risk, particularly in a quantifiable manner.