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If a government signals the possibility of nationalisation in an industry, which risk will private investors focus on?

Answer and explanation

Correct answer: Risk of losing ownership and control

The governing concept is the political environment of business. Government decisions, policy signals, changes in ownership rules, and possible nationalisation can directly affect the rights and control of private investors. If an industry may be nationalised, investors will assess the risk that their private ownership, management authority, assets, or expected returns could be reduced or transferred to the state. Therefore option A is correct. Customer colour preference is a marketing issue, machine speed is an operational or technological issue, and weather temperature is an external physical factor; none directly expresses the political ownership risk created by nationalisation. The signal may not guarantee nationalisation, but it is clearly a political risk.

Related tags

Business-EnvironmentPolitical-EnvironmentNationalisationInvestment-RiskPolitical EnvironmentBusiness EnvironmentBusiness StudiesClass 12 Mcq

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