Place the following investment decisions in order from the lowest risk to the highest risk:
(a) purchase of replacement machinery
(b) new product in a foreign market
(c) new product in the local market
(d) repair of existing machinery

Question

Quizplus · Accepted Answer

Repairing existing machinery (d) involves the lowest risk as it maintains current operations without significant change. Purchasing replacement machinery (a) is next, as it involves capital expenditure but for the purpose of maintaining or slightly improving existing operations. Introducing a new product in the local market (c) carries more risk due to uncertainties in customer acceptance and market dynamics. Launching a new product in a foreign market (b) is the riskiest due to additional complexities such as cultural differences, regulatory environments, and exchange rate risks.

Place the Following Investment Decisions in Order from the Lowest