Concern about the cost of managing a widely diversified financial company has been used to justify product segmentation on the grounds of
A)safety and soundness issues.
B)economy of scale and scope issues.
C)conflict of interest issues.
D)deposit insurance issues.
E)regulatory oversight issues.

Question

Quizplus · Accepted Answer

Economy of scale and scope refer to the cost advantages that can be achieved by a company from producing or providing a larger volume or variety of products or services, respectively. By segmenting products, a widely diversified financial company can potentially reduce the cost of managing and providing each product as it can allocate resources more efficiently, resulting in cost savings. Therefore, product segmentation can be justified on these grounds. The other options are not directly related to cost considerations.

Concern About the Cost of Managing a Widely Diversified Financial