An Example of Economies of Scale in the Provision of Financial

question 78

Multiple Choice

An example of economies of scale in the provision of financial services is

• A) investing in a diversified collection of assets.
• B) providing depositors with a variety of savings certificates.
• C) spreading the cost of borrowed funds over many customers.
• D) spreading the cost of writing a standardized contract over many borrowers.

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Definitions:

Financing Activities

Transactions and events related to raising capital, repaying investors, issuing dividends, and loans that affect a company's capital structure and equity.

Net Cash

The difference between a company's total cash inflows and outflows in a given period.

Operating Activities

Activities directly related to the day-to-day operations of a business, such as selling products and services, which generate most of its revenue and cash flows.

Depreciation Expense

Allocating the value of a tangible asset over its productive life in a systematic manner.