Which of the Following Is NOT an Advantage to a Joint

question 19

Multiple Choice

Which of the following is NOT an advantage to a joint venture?

• A) Possible loss of opportunity to enter the foreign market with FDI later.
• B) The local partner understands the customs and mores of the foreign market.
• C) The local partner can provide competent management at many levels.
• D) May be a realistic alternative when 100% foreign ownership is not allowed.

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Definitions:

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares.

Par Value

The nominal value per share of stock as specified in the corporate charter; also, another name for bond principal, or the maturity amount of a bond (in Chapter 10).

Shares Outstanding

The total number of shares of a company held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Preferred Stockholders

Investors who own preferred shares in a company, which often grant dividends before common stockholders and have priority in asset liquidation.