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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 ... 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
Select one answer:
Answer
The correct answer is D: There is a 30% chance of his business failing.
Explanation
A calculated risk involves a situation where the potential outcome can be estimated and calculated, allowing decision-makers to weigh the pros and cons.
- Option A (Sales increased by 10%) represents positive growth but lacks inherent risk.
- Option B (Expenses increased by 15%) is concerning but does not itself indicate a specific risk.
- Option C (Profit decreased by 3.5%) indicates a negative trend but lacks a direct assessment of failure likelihood.
- Option D (30% chance of business failing) directly quantifies a risk, making it a true example of a calculated risk.