Which of the Following Statement Is Not Correct Regarding the Costs

question 12

Multiple Choice

Which of the following statement is not correct regarding the costs associated with purchasing a franchise?

• A) The franchisee typically pays a royalty based on a percentage of weekly or monthly net income.
• B) Capital costs vary by franchisor, but may include the cost of buying land and building a building.
• C) Additional fees may be charged for activities such as training staff, providing management expertise when needed, and providing computer assistance.
• D) Franchisees are often required to pay into a national or regional advertising fund.
• E) The initial franchise fee varies, depending on the franchisor.

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Definitions:

Neglected Stocks

Stocks that are under-followed or ignored by analysts and investors, often resulting in undervaluation.

Market Efficiency

A market theory that suggests that asset prices fully reflect all available information, making it impossible to consistently achieve higher returns than the overall market.

Semistrong-Form Market Efficiency

A theory stating that all publicly available information is already reflected in stock prices, thus making it impossible to achieve consistently higher returns.

Index Fund

A type of mutual fund or exchange-traded fund (ETF) designed to follow the components of a market index, such as the S&P 500, to provide broad market exposure with low operating expenses.