CFA Level I · CFA Level I Exam · Business Models
A business model describes how a company creates, delivers, and captures value. Which of the following is most likely a component of a company's value proposition?
The benefits customers receive from the product are part of the value proposition. It states why customers should choose the company, for example through lower price, better quality or convenience. Capital structure and tax rates are financial and tax matters, not customer-facing value.
- AThe benefits customers receive from its productCorrect
- BThe company's debt-to-equity ratio
- CThe tax rate applied to profits
Explanation
A value proposition describes the benefits and solutions the company offers to customers, such as lower cost, convenience or quality. The capital structure and tax rate are financing and tax matters, not what customers receive, so they are not part of the value proposition.
Did you get it right without looking?
One question tells you little. A timed set on Business Models shows your real accuracy, how long you take and where you lose marks.
More Business Models questions
- A company sells razors at a low price and earns most of its profit from recurring sales of proprietary replacement blades that fit only its …
- Company X sells printers at a small margin and earns most of its profit from proprietary ink cartridges bought repeatedly by printer owners.…
- An online platform connects independent drivers with riders and keeps a 20% commission on each fare, owning no vehicles. Compared with a tra…
- A software firm gives its basic product free of charge and earns revenue only from a small share of users who upgrade to paid premium featur…
- A retailer adds a marketplace where independent sellers list products on its platform, earning a commission without holding inventory. This …
- An analyst assesses a mining company's business model. Management has signed long-term offtake contracts but faces rising carbon-pricing reg…