The main reason that an internal capital market would generate superior returns for shareholders as compared with external capital markets is
A) the effective transfer of core competencies within an internal capital market.
B) the increased operational and corporate relatedness generated by an internal capital market.
C) the improved access to information about SBUs.
D) the higher motivation by managers of SBUs when competing for funds.

Question

Quizplus · Accepted Answer

The improved access to information about Strategic Business Units (SBUs) within a company allows for more informed and efficient allocation of capital, leading to potentially superior returns for shareholders compared to external capital markets where such detailed internal information might not be as readily available or accurately assessed.

The Main Reason That an Internal Capital Market Would Generate