An Ability to Efficiently Allocate Capital Through an Internal Market

question 40

Multiple Choice

An ability to efficiently allocate capital through an internal market may help the firm protect the competitive advantages it develops:

• A) through reduced disclosure to outside parties.
• B) by the ability to not report losses to investors.
• C) by the ability to increase pay to managers without shareholders being aware.
• D) through the ability to reinvest cash in dividends to shareholders.

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Definitions:

Neutral Third Party

An unbiased individual or group engaged to mediate or arbitrate between conflicting parties.

Mediation

A form of alternative dispute resolution where a neutral third party, the mediator, helps disputing parties find a mutually satisfactory solution.

Dispute

A disagreement or argument about something important.

Compel Arbitration

A legal process where a court requires disputing parties to resolve their issues through arbitration rather than litigation.