The Corporate Travel Segment Is Often Said to Be Relatively

question 131

Multiple Choice

The corporate travel segment is often said to be relatively price insensitive. Which of the following is the MOST LIKELY explanation for price insensitivity in this market segment?

• A) The cost of switching to other travel service providers including airlines and hotels is relatively low.
• B) It is difficult for business executives to compare suppliers and prices.
• C) Travel expenses are relatively small compared to executive salaries.
• D) Some, or all, of executive travel costs are paid by their employers.
• E) All of the above are possible explanations.

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Definitions:

Financial Markets

Financial markets are platforms where individuals and entities can trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices reflective of supply and demand.

NPV Projects

Projects that are evaluated based on the Net Present Value method, helping in deciding whether they contribute positively to the company's value.

Soft Rationing

Refers to the internal limitations set by a company on the funds allocated for capital projects, despite having a strong financial position.

Hard Rationing

A situation in corporate finance where there is a strict limit on the amount of new equity a company can issue.