Discuss the risk associated with fixed capital. - Vidyadip

Question

Discuss the risk associated with fixed capital.

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Answer

Risk:

Fixed capital remains blocked up in fixed assets for a longer period. So, there arises a risk of return on investment in case changes occur in technology, preference of consumers, etc. because the machinery or plant may become obsolete as compared to these changes.
Apart from this, changes in political, social and economic factors also tend to raise the rate of risk.

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