Question

Because risk is associated with the potential for higher profits, businesspersons are motivated to choose organizational forms that limit their liability while allowing them to take risks that may lead to greater profits.True / False.

Answer 1

True

Step-by-step explanation:

Investors and businessmen consider the risk-return ratio when making an investment decision. Likewise, high risk leads to high returns and low risk leads to low returns. Risk lovers are generally more interested in taking a higher risks to achieve a higher return. Similarly, businesspersons are mostly risk neutral that is why they always look for an opportunity that could provide a higher return with seemingly less liability involved. So, the above statement is true.