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CFA Level I · CFA Level I Exam · Business Models

A retailer's board wants to assess whether its business model is sustainable over the long term. Which factor is most relevant to that assessment?

The most relevant factor is whether the value proposition can adapt to changing customer preferences and resource constraints. Sustainability of a business model depends on continuing to create and capture value over time, whereas a quarterly share price move or store openings reflect short-term performance or growth.

  1. AThe share price change over the last quarter
  2. BWhether the value proposition can adapt to changing customer preferences and resource constraintsCorrect
  3. CThe number of stores opened during the last year

Explanation

Long-term sustainability depends on the model's ability to keep creating and capturing value as customers, technology and resource conditions change. Quarterly share price moves are short-term market noise, and store count measures growth, not durability.

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