The Automobile Industry Is Characterized by Many Manufacturers and Intense

question 67

Multiple Choice

The automobile industry is characterized by many manufacturers and intense competition among them. According to Porter's five forces model, this statement illustrates ________.

• A)low threat of substitutions
• B)high bargaining power of suppliers
• C)high levels of rivalry
• D)low bargaining power of customers

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Definitions:

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Cost Of Debt

The effective interest rate that a company pays on its total debt, influencing its finance strategy.

Total Capital

The sum of a company's equity and debt, reflecting the total resources available to the company for business activities.

Modigliani And Miller Model

A financial theory stating that the market value of a company is determined by its earning power and the risk of its underlying assets, and is independent of the way it chooses to finance its investments or distribute dividends.