Question
When we talk about risk in finance, we are talking about the chance that you could lose assets or lose your earning potential. Which of these activities highlights risk as a potential loss of assets? Choose 1 answer: A buying a car that may need expensive repairs in the future B losing your job and not being able to earn money for a while C investing your money in a new business that might fail
Answer
4.4
(186 Votes)
Kristina
Master · Tutor for 5 years
Answer
C
Explanation
Risk in finance refers to the potential for loss in the value of assets or a decrease in earning potential. To evaluate the options given:(A) Buying a car that may need expensive repairs in the future represents a financial risk. The car, being an asset, can depreciate in value due to repairs, thus potentially leading to a loss in the asset's value.(B) Losing your job and not being able to earn money for a while is related to a loss of earning potential rather than a direct loss of assets.(C) Investing money in a new business that might fail is a direct example of financial risk in terms of assets. The investment made into the business is at risk of loss if the business fails.Among these, the options that highlight risk as a potential loss of assets are both (A) and (C). However, since the question asks to choose one answer that best represents this concept, the most direct example is (C) investing your money in a new business that might fail, as it directly involves the risk of losing the invested assets.