Which of the Following Statements Is True of Outsourcing

question 62

Multiple Choice

Which of the following statements is true of outsourcing?

• A) It reduces economic risk by facilitating the purchase of large insurance policies.
• B) It reduces production risk by eliminating delays in the timely receipt of needed parts.
• C) It reduces political risk by enabling the company to avoid investing in plants and equipment abroad.
• D) It reduces currency risk by allowing the company to invest the home currency on in-house production facilities.

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Definitions:

Medium of Exchange

A facilitating device or arrangement employed to assist in the transactions of buying, selling, or trading items between entities.

Legal Tender

Currency that must be accepted if offered in payment of a debt, by law.

Federal Deposit Insurance

A government guarantee that protects bank depositors' funds up to a certain limit in case of a bank failure.

Bank Panics

Events in which a large number of bank customers withdraw their deposits simultaneously due to fears that the bank will become insolvent.