Identify the INCORRECT Statement About Trade Barriers

question 11

Multiple Choice

Identify the INCORRECT statement about trade barriers.

• A) They raise the costs of exporting products to a country.
• B) They may put a firm at a competitive advantage to indigenous competitors.
• C) They may limit a firm's ability to serve a country from locations outside of that country.
• D) To conform to local content regulations, a firm may have to locate more production activities in a given market than it would otherwise.

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Definitions:

Expected Return

The forecasted amount of profit or loss an investment is likely to generate over a given period.

Beta

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

SML

The Security Market Line, a graphical representation of the Capital Asset Pricing Model (CAPM) showing the relationship between the expected return of a security and its risk.

CML

The Capital Market Line, representing the risk-return trade-off of efficient portfolios in the capital market theory; it shows the highest return possible for any given level of risk.