Question

Which of the following statements is not true with regard to use of fixed capital?

Options

• It affects the long-term growth of the business.

• Large amount of funds is involved.

• The business risk involved is low.

• The investment decisions are irreversible.

Answer 1

The business risk involved is low.

Explanation:

• Fixed capital is used to buy long-term assets like machinery, buildings, and land.
• These decisions involve large funds, affect long-term growth, and are often irreversible.
• However, they carry high risk, not low risk, because once you invest in fixed assets, you can't easily change or sell them.