Question

How does the level of risk influence contract design?

a.

It determines the complexity of the product

b.

It affects the acceptability of guarantees offered

c.

It has no impact on product design

d.

It influences the marketing strategy

Answer: (b).It affects the acceptability of guarantees offered Explanation:The level of risk influences contract design by affecting the acceptability of guarantees offered, as higher guarantees typically increase risk, thus requiring a balance between marketability and risk.

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Q. How does the level of risk influence contract design?

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