The Primary Factor Determining the Degree of Vertical Integration in a Firm

question 25

Multiple Choice

The primary factor determining the degree of vertical integration in a firm is:

• A)Transaction costs
• B)Administrative costs
• C)The relative level of transaction costs to administrative costs
• D)The nature of an industry

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Definitions:

Coupon Bond

A type of bond that pays the holder a regular interest rate (or coupon) in addition to the principal amount at maturity.

Yield To Maturity

The total return anticipated on a bond if the bond is held until its maturity date.

Par Value

The face value of a bond or the stated value of a stock, set at the time of issuance and often used in determining its worth at maturity.

Coupon Rate

The interest rate that an issuer of a bond promises to pay annually or semi-annually to the holder.