n NISM Certifications
XV NISM Series XV
Medium

When is the threat of substitutes high?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    When the substitute offers a better price

  2. B

    When the substitute offers better quality

  3. C

    When the substitute offers better ease

  4. All of the above

    Correct answer

Why this is the answer

The threat of substitutes increases when alternative products offer better pricing, improved quality, or greater convenience. Low switching costs further strengthen this threat, increasing competitive pressure on existing firms.

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NISM XV Mock Test 5