Which of the Following Statements Is False

question 40

Multiple Choice

Which of the following statements is false?

• A) Horizontal integration entails the merger of a firm and its supplier or a firm and its customer.
• B) Like insurance, hedging involves contracts or transactions that provide the firm with cash flows that offset its losses from price changes.
• C) For many firms, changes in the market prices of the raw materials they use and the goods they produce may be the most important source of risk to their profitability.
• D) Because an increase in the price of the commodity raises the firm's costs and the supplier's revenues, these firms can offset their risks by merging.

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Definitions:

Corporate Scandals

Incidents involving alleged or actual unethical behavior by people in leadership positions within corporations.

Tying Contracts

Agreements where the sale of one product (the tying product) is conditioned on the purchase of another, often unrelated product (the tied product).

Sherman Antitrust Act

A landmark 1890 U.S. legislation aimed at regulating competition among enterprises, preventing monopolies, and promoting fair business practices.

Cross-Border Mergers

Mergers involving companies headquartered in different countries with the aim of expanding market reach, efficiency or capabilities.