DECA Sports and Entertainment Marketing Practice Exam

How does "Capital" support a company’s operations?

1. By guiding marketing strategies

2. By providing the financial resource for investments

3. By determining product pricing

4. By offering banking services

The correct answer is: By providing the financial resource for investments

The correct answer highlights the role of capital as a fundamental financial resource that fuels a company's operations. Capital encompasses the funds necessary for a business to invest in various aspects such as equipment, technology, workforce, research, and development. Access to adequate capital allows a company to grow, expand its operations, and enhance its service or product offerings. This financial support enables companies to undertake new projects, enter different markets, or improve existing operational processes. Without sufficient capital, businesses may struggle to maintain day-to-day operations or pursue new opportunities, ultimately affecting their sustainability and competitiveness in the market. The other options, while related to important business functions, do not directly define capital's primary purpose in supporting operations. For example, guiding marketing strategies or determining product pricing are important aspects of management and decision-making but do not inherently involve the financial support that capital represents. Similarly, while banking services facilitate access to capital, they are part of the broader financial system rather than the direct provision of resources that capital represents.