Which of the Following Is NOT a Reason Why Companies

question 7

Multiple Choice

Which of the following is NOT a reason why companies move into international operations?

• A) To develop new markets for the firm's products.
• B) To better serve their primary customers.
• C) Because important raw materials are located abroad.
• D) To increase their inventory levels.
• E) To take advantage of lower production costs in regions where labor costs are relatively low.

---

Definitions:

Liquidity Premium (LP)

Additional return demanded by investors for holding securities with lower liquidity, compensating for the potential cost and difficulties in trading.

Maturity Risk Premium (MRP)

Additional return investors demand for holding longer-term securities, compensating for the risk of price fluctuations over time.

Real Risk-free Rate

The theoretical return on an investment with no risk of financial loss, adjusted for inflation.

Inflation Premium

The additional interest that investors require to compensate for the decrease in purchasing power of money due to inflation over time.