Question

Select all the correct answers.

Which three factors make starting a business a highly risky investment?
high coupon rate
hbusiness condition
O large amount of capital
low interest rates
low liquidity
Reset
Next
hshaamjaah

Answer 1

Business condition

Large amount of capital

Low Liquidity

Step-by-step explanation:

In order to form a business, you need allocate large amount of capitals to purchase the factors of production. This include things such as Buildings, rents, machineries/equipment's, labors salary, and materials.

All of this will require a lot of capital. But, there's no guarantee that your business will be successful and you'd make your money back. So, business condition might also become an issue.

If you fail your business, you couldn't instantly turn all of the things that you purchase into cash. The assets might lost some of the value and you might only get a fraction of what you initially spent. This is why we consider opening a business to have 'low liquidity'