Which of the Following Statements Is True About Potential Competitors

question 9

Multiple Choice

Which of the following statements is true about potential competitors in an industry?

• A) They threaten the profitability of established companies.
• B) They are usually encouraged by established companies.
• C) They find it easier to enter an industry when the entry barriers are high.
• D) They find it easier to enter an industry when established companies have economies of scale.
• E) They usually have an absolute cost advantage over established companies.

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Definitions:

State Bond

Debt securities issued by a state government to finance its expenditures, offering a way for investors to lend money to the government in exchange for interest payments.

Buy-And-Hold

An investment strategy where securities are purchased and held for a long period to mitigate the effects of market volatility.

Equally Weighted

A type of investment strategy where each asset in a portfolio is given the same investment weight regardless of its size, market capitalization, or other characteristics.

Value-Weighted

A method of calculating a stock index where each stock affects the index in proportion to its market value.