Economies of Scope Arise When One or More of a Diversified

question 48

True/False

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because it can more effectively pool, share, and utilize resources or capabilities.

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Definitions:

Available-For-Sale Securities

Financial assets that are intended to be sold before their maturity but are not classified as trading securities.

Investment Account

A financial account held at a financial institution or brokerage that is used to hold securities, stocks, bonds, mutual funds, and other investments.

Equity Method

An accounting technique used for recording investments in associated companies, where the investment's carrying value is adjusted to recognize the investor's share of the earnigns or losses of the investee.

Dividends Received

Payments made to shareholders out of a corporation's earnings, representing a share of the profits.