Fact Pattern 32-1

question 2

Multiple Choice

Fact Pattern 32-1
Cardio, Inc., makes and sells Drawdown, the most prescribed name-brand heart medication. Emitate Corporation has the potential to make a generic version of the same drug.
-Refer to Fact Pattern 32-1. Cardio pays Emitate not to sell its product. This is

• A) a customer restriction.
• B) a joint venture.
• C) an exclusive-dealing contract.
• D) a price-fixing agreement.

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Definitions:

Plowback Ratio

A financial metric that measures the proportion of earnings retained by a company after dividends have been paid out to shareholders.

Dividend Payout

The fraction of a firm's earnings allocated to its shareholders through dividends.

Financial Planning

The process of estimating the capital required and determining its competition; it is the process of framing financial policies in relation to procurement, investment, and administration of funds of an enterprise.

Financial Policy

A set of guidelines or a framework that directs and governs how a company manages its financial resources, including investment, financing, and dividend policies.