Which of the Following Statements Regarding Long-Term Supply Contracts Is

question 32

Multiple Choice

Which of the following statements regarding long-term supply contracts is FALSE?

• A)The market value of the contract at any point in time may not be easy to determine,making it difficult to track gains and losses.
• B)Long-term supply contracts are designed to eliminate credit risk.
• C)Long-term supply contracts insulate the firms from commodity price risk.
• D)Long-term supply contracts are bilateral contracts negotiated by a buyer and a seller.

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Definitions:

Production Processes

The methods and sequences of operations used to produce a good or service.

High Quality

Refers to products, services, or processes that meet or exceed set standards of excellence and are superior in performance or craftsmanship.

Low Price

An offering or commodity available at a reduced cost, making it more accessible or attractive to buyers.

Inventory

Goods a business owns for the completion of future sales. Also, the act of counting the goods held in stock.