Which of the Following Is Not a Barrier to Entry

question 16

Multiple Choice

Which of the following is not a barrier to entry in professional sports markets?

• A)Each league has rules governing the addition of new franchises
• B)Potential new owners must pay current owners hundreds of millions of dollars
• C)Most potential owners must offer to build new stadiums
• D)Incumbent teams have rights to veto franchises in their own geographic markets
• E)Because the number of potential billionaire owners has risen dramatically,the purchase prices have dropped

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Definitions:

Option Contract

A financial derivative that represents a contract sold by one party to another, offering the buyer the right, but not the obligation, to buy (call) or sell (put) a security at an agreed-upon price within a certain period of time.

Forward Contract

An agreement between two entities that is not regulated, outlining the purchase or sale of an asset at a predetermined future date for a price that is decided upon at the current time.

Obligation

A legal or financial duty to make a payment or fulfill a contract.

Futures Contracts

Financial contracts obligating the buyer to purchase an asset, or the seller to sell an asset, at a predetermined future date and price.