One Essential Trade-Off Involving Business Risk in a Market System

question 19

Multiple Choice

One essential trade-off involving business risk in a market system is reflected in which of the following statements?

• A) Access to the firm's profits and gains are open only to those who take on the business risk of the firm.
• B) Those who receive guaranteed payments from the firm are also guaranteed a share of the firm's profits.
• C) Those who make bad decisions regarding risk will suffer losses; those who decide wisely will gain profits.
• D) Those who bear the business risk of the firm are guaranteed to always gain profits.

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Definitions:

Investment Return

The profit or loss on an investment over a specified period, represented as a percentage of the investment's initial cost.

Present Values

The worth of a future amount of money today, calculated by discounting future cash flows at a specific interest rate.

Annuities

Savings vehicles that deliver scheduled payouts, commonly utilized for building retirement reserves.

Compute

To calculate or determine by mathematical methods.