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.

Question

Quizplus · Accepted Answer

Economy of scale and scope refers to the cost advantage that a company can achieve by producing a range of products or services at a lower cost than the individual cost of each. This can help to offset the additional expenses of running a diversified financial company and increase overall profitability. Therefore, segmentation can be justified on this basis. The other options, safety and soundness, conflict of interest, and deposit insurance, are not as relevant to the cost concerns of managing a diversified financial company.

Concern About the Cost of Managing a Widely Diversified Financial