A Silicon Chip Manufacturer Agreed to Purchase Computers from a Computer

question 16

Multiple Choice

A silicon chip manufacturer agreed to purchase computers from a computer firm that buys its silicon chips from the first firm. After the agreement, neither of the two companies bought from outside competitors, thereby closing off the markets of the two firms. This is an example of _____.

• A) foreclosure
• B) entrenchment
• C) reciprocity
• D) arbitration

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Definitions:

Stock Investments

Purchasing and holding shares of stock in a company with the expectation of earning a return in the form of dividends, capital gains, or both.

Common Stock

A type of security that represents ownership in a corporation, granting shareholders voting rights and a share in the company’s profits through dividends.

Equity Method Investment

An accounting technique used by firms to assess the profits earned through their investments in other companies by reporting these profits in proportion to their ownership stake.

Long-Term Investments-AFS

Available-for-Sale Long-term Investments are financial assets not classified as trading or held-to-maturity investments, valued at fair market prices with gains or losses reported in other comprehensive income.