Which of the following statement is NOT true with regard to use of fixed capital by a concern?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- The business risk involved is low.
The business risk involved is low is not true as there is more risk with regard to use of fixed capital by a concern.
Fixed capital involves investment of huge amounts. It affects the returns of the firm as a whole in the long term. Therefore, investment decisions involving fixed capital influence the overall business risk complexion of the firm. Thus, Business Risk is high in case of use of fixed capital.