International Price Discrimination for a Good Is Possible If

question 52

Multiple Choice

International price discrimination for a good is possible if

• A)goods are sold through the gray market.
• B)the price difference between two countries is greater than the transaction costs in arbitrage.
• C)the price difference between two countries is less than the transaction costs in arbitrage.
• D)None of the above.

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Definitions:

Hurdle Rate

The project cost of capital, or discount rate. It is both the rate used in discounting future cash flows in the net present value method and the rate that is compared to the internal rate of return.

Intrinsic Value

The actual value of a company, asset, or currency determined through fundamental analysis without reference to its market value.

Risk-Adjusted

Pertaining to the modification of financial analysis or return on an investment to account for the risk involved, ensuring a more accurate assessment of performance or value.

Preferred Stock

Preferred Stock is a class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often entitling holders to fixed dividends but with limited or no voting rights.