Compared with Diversification Based on Intangible Resources, Diversification Based on Financial

question 87

Multiple Choice

Compared with diversification based on intangible resources, diversification based on financial resources is:

• A) less imitable and less likely to create value on a long-term basis.
• B) more imitable and less likely to create value on a long-term basis.
• C) less imitable and more likely to create value on a long-term basis.
• D) more imitable and more likely to create value on a long-term basis.

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Definitions:

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the principal, charged by lenders to borrowers for the use of funds.

Wine Barrels

Containers traditionally made of oak wood, used for aging and storing wine to enhance its flavor and quality.

Exhaustible Resource

A natural resource that has a finite supply and can be depleted by human activities, such as fossil fuels or minerals.

User Cost

The opportunity cost of using a durable good, which includes depreciation and the foregone interest on the funds tied up in owning the good.