Emma should reflect about warranty and replacement price to assess the risk.
Risk and return in financial management refer to the potential dangers and rewards of an investment. Financial returns from investments with higher risk levels often outpace those with lower risk levels. In other words, the risk associated with a particular investment and the returns it yields are closely tied.
Emma will need to reflect on these relevant issues to evaluate the risk:
- Will any physical damage be covered by the warranty?
Because if she needs to use the warranty, it will be the main ongoing expense.
- Is the price of replacement less than the price of the warranty? If so, purchasing the warranty will be useless because she may obtain a new computer and a new warranty at the same time.
- Is the warranty worth the additional cost for the laptop?
Or maybe buying a newer model is just less expensive.
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