Competitive Bidding, Active Sourcing, and Using Industry Standards Are All

question 61

Multiple Choice

Competitive bidding, active sourcing, and using industry standards are all actions that are appropriate if the sourcing strategy is to:

• A)form partnerships with suppliers.
• B)maximize commercial advantage.
• C)simplify the acquisition process.
• D)ensure supply continuity.

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Definitions:

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often estimated using the Capital Asset Pricing Model (CAPM).

Pre-Tax Cost of Debt

The rate of return that a company pays on its debt, before taking into account tax deductions.

Face Value

The nominal value printed on a bond or security which indicates its worth at maturity but does not necessarily reflect its market value.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its shareholders and debt holders, weighted according to the proportion of equity and debt in the company's capital structure.