Which of the Following Statements Regarding the Rarity of Diversification

question 80

Multiple Choice

Which of the following statements regarding the rarity of diversification is accurate?

• A) If only a few competing firms have exploited a particular economy of scope, that economy of scope can be rare.
• B) A particular economy of scope can only be rare if no other firms are exploiting that economy of scope.
• C) A particular economy of scope can be rare even if many other firms are exploiting that economy of scope.
• D) If only a few competing firms have exploited a particular economy of scope, that economy of scope can be rare but only if the firm is pursuing unrelated diversification.

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Definitions:

Required Reserve Ratio

The fraction of deposits that banks are required by law to keep on hand as reserves or with the central bank.

Discount Rate

The interest rate charged by central banks to commercial banks for loans.

Government Securities

Financial instruments issued by a government to raise funds from investors, promising to pay back with interest, including treasury bonds, bills, and notes considered low-risk investments.

Federal Reserve Board

The governing body of the Federal Reserve System, responsible for overseeing the U.S. central banking system.