Each of the Following Is a Disadvantage of Buying Rather

question 181

Multiple Choice

Each of the following is a disadvantage of buying rather than making a component of a company's product except that

• A) quality control specifications may not be met.
• B) the outside supplier could increase prices significantly in the future.
• C) profitable product lines may be dropped.
• D) the supplier may not deliver on time.

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Definitions:

Gains

Profits realized from the sale of assets or from investment income, including dividends, interest, and capital gains.

Strike Price

The specified price at which the buyer of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Risk-free Rate

The theoretical rate of return of an investment with zero risk of financial loss, typically represented by the yield on government securities.

Maturity

The time at which payment to a bondholder is due or the termination date of an investment contract.