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Question

Which of the following statements is not correct?

A Large variation in net cash flows happens in the business with higher risk. Correct Answer Incorrect Answer
B Capital requirement would be lesser in higher risk business Correct Answer Incorrect Answer
C The profit potential would be lower in a business with a lower risk Correct Answer Incorrect Answer
D Lower the variation in net cash flow, lower the risk Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

In case of higher risk, the capital requirement would be higher to provide for higher possibility of loss.

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