The exposure a firm opens itself to when developing a project that requires a large up-front investment can be classified as:
A)Financial risk.
B)Technical risk.
C)Execution risk.
D)Legal risk.

Question

Quizplus · Accepted Answer

Financial risk refers to the potential loss of funds or investment by a company if a project fails or does not generate expected returns. This type of risk is especially significant for projects that require a large up-front investment, as the company may have limited resources to recoup the investment if the project fails. Technical risk refers to the potential failure of a project due to technical issues, execution risk refers to the risk of not being able to execute the project successfully, and legal risk refers to the potential legal issues that may arise during the project development process. While these risks may also be present in projects with large up-front investments, the financial risk remains the most significant one.

The Exposure a Firm Opens Itself to When Developing a Project