Question

Compared with diversification based on intangible resources, diversification based on financial resources is: a. less imitable and more likely to create value on a long-term basis. b. more imitable and less likely to create value on a long-term basis. c. less imitable and less likely to create value on a long-term basis. d. more imitable and more likely to create value on a long-term basis.

Answer 1

b. more imitable and less likely to create value on a long-term basis.

Step-by-step explanation:

In Finance, diversification can be defined as an investment technique that focuses on distributing capital or portfolio across various investments.

Basically, the aim of adopting a diversification is to lessen or mitigate the degree of uncertainty of the portfolio by enhancing its high long-term returns.

Diversification helps financial experts or investors to complement or annul the losses associated with an asset class by the benefits of another asset class in a portfolio.

Compared with diversification based on intangible resources, diversification based on financial resources is more imitable or copied by rivals in the industry and less likely to create value on a long-term basis.

Diversification based on intangible resources, includes intellectual property, brand recognition, human resources, patents, customer lists, trademarks, copyrights, and goodwill etc.

Diversification based on financial resources, includes shares, money, bond, gold, debentures, checks, and promissory notes.