John's Surfboard Shop Has a Long-Term Relationship with Two Surfboard

question 54

Multiple Choice

John's surfboard shop has a long-term relationship with two surfboard makers. John is using:

• A) parallel sourcing.
• B) cross-selling.
• C) product bundling.
• D) vertical integration.
• E) horizontal integration.

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Definitions:

Transaction Costs

Expenses incurred when buying or selling securities, including commissions, exchange fees, and taxes that can affect the profitability of investments.

Tax Shield

The reduction in income taxes that results from taking an allowable deduction from taxable income.

Bankruptcy Costs

Expenses and financial losses associated with undergoing bankruptcy, including legal fees, asset liquidation costs, and potential loss of business.

Optimal Capital Structure

The best mix of debt, equity, and other financial instruments that maximizes a company's market value while minimizing its cost of capital.