An Evaluation of Franchising Would Conclude That This Type of Arrangement

question 79

Multiple Choice

An evaluation of franchising would conclude that this type of arrangement:

• A)has little chance of success outside the United States because many foreign countries do not allow such arrangements.
• B)has become the dominant form of business organization in Canada because it has many advantages and almost no disadvantages.
• C)appeals to people who want to own a business,but are not comfortable starting a company from scratch.
• D)has a much higher risk of failure than independent companies.

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Definitions:

Volatility

Measures the degree of variation of a trading price series over time, indicating the level of uncertainty or risk associated with the size of changes in a security's value.

Unsystematic Risk

The risk associated with a specific issuer of a security or investment, which can be mitigated through diversification.

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio to minimize the impact of any single investment's performance.

Portfolio Theory

A framework for constructing a portfolio of assets in such a way that it optimizes the balance between risk and return.