Refer to the Scenario Below to Answer the Following Questions

question 94

Multiple Choice

Refer to the scenario below to answer the following questions.
Clubhouse Gourmet -A- (Scenario)
Imagine that you are the president of Clubhouse Gourmet, a successful chain of fast-food restaurants with 60 locations across Canada. The success you have experienced in the last five years has you considering various options about what to do next with the business. Should you continue to expand the business at the current rate? Or perhaps open new and different restaurants? What should you do?
-With the acquisition of Sandwich King, you now have more than 100 restaurant locations across Canada. The bread suppliers that you have been using are unable to keep up with demand in some markets, so you decide to purchase a wholesale bakery that is large enough to provide a secure supply of fresh bread to your busiest restaurants. Purchasing the bakery is an example of which strategy?

• A) stability
• B) unrelated diversification
• C) forward vertical integration
• D) backward vertical integration
• E) horizontal integration

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Definitions:

Time-Weighted Return

A method to measure the rate of return of an investment portfolio which eliminates the distorting effects of inflows and outflows of money.

Dividend

Dividend represents the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Share

A unit of ownership in a company or financial asset, often traded on a stock exchange.

Arithmetic Average Return

The simple average of a series of returns over a period of time, calculated by summing the returns and dividing by the number of periods.