Which of These Statements Regarding Corporate Chains Is Most Accurate

question 35

Multiple Choice

Which of these statements regarding corporate chains is most accurate?

• A) Corporate chains cannot bargain with a manufacturer to obtain product volume discounts due to federal anticompetitive legislation-the Clayton Act as amended by the Sherman Act.
• B) Corporate chains generally own most if not all of their suppliers-a practice known as forward integration-so they can save distribution costs.
• C) Consumers have fewer choices in merchandise since all buying decisions are made by a decentralized buying committee.
• D) Corporate chains offer the least benefit to consumers since they are the farthest removed from the ultimate consumer.
• E) Corporate chains are multiple outlets under common ownership.

Understand the impact of risk aversion and investment financing options on the required rate of return.

Describe the relationship between dividend growth rates and the cost of external equity capital.

Understand the differences between the cost of debt and the cost of equity and their implications for the WACC.

Comprehend how corporate tax rates influence the after-tax cost of debt and WACC.

---

Definitions:

Licensing

A business arrangement in which one party allows another to use its trademark, patent, or technology in exchange for a fee or royalty.

Franchising

A method of doing business wherein a franchisor licenses trademarks and proven methods of doing business to a franchisee in exchange for a recurring payment, and usually a percentage of gross sales or gross profits as well as the annual fees.

Indirect Exporting

The process of selling products to a foreign market through an intermediary, such as an export trading company or an export management company, rather than directly to the consumer or retailer.

Direct Exporting

A method of entering a foreign market by selling goods directly to customers in another country, bypassing any intermediaries.