A Firm May Choose to Build a Flexible Global Supply

question 51

Multiple Choice

A firm may choose to build a flexible global supply chain even in the presence of little demand or supply uncertainty if

• A) certainty exists in both exchange rates and prices.
• B) certainty exists in exchange rates or prices.
• C) uncertainty exists in both exchange rates and prices.
• D) uncertainty exists in exchange rates or prices.
• E) uncertainty exists only in exchange rates.

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility, while a beta less than 1 indicates lower.

Required Rate of Return

A rephrasing of Required Return; the minimum annual percentage earned by an investment that will entice an individual or company to invest money.

Expected Growth Rate

The projected annual rate at which an investment or business is expected to grow.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.