Elaborate on the Dynamic Capabilities Perspective of Competitive Advantage

question 54

Essay

Elaborate on the dynamic capabilities perspective of competitive advantage.

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Definitions:

Real Risk-free Rate

The rate of return on an absolutely risk-free investment, adjusted for inflation, representing the minimum return investors would expect for any investment risk.

Inflation Premium (IP)

The additional amount that investors require on the return of an investment to compensate for the loss of purchasing power due to inflation.

Maturity Risk Premium (MRP)

The Maturity Risk Premium is the additional return investors demand for holding longer-term securities due to increased risk of price fluctuations and uncertainty over a long period.

Treasury Bonds

These are long-term, fixed-interest government debt securities with a maturity of more than ten years. They are considered safe investments because they are backed by the U.S. government.