The Software Business Is Extremely Profitable Compared to the Hardware

question 2

Multiple Choice

The software business is extremely profitable compared to the hardware business because:

• A) the marginal cost to produce an additional copy of a software product is effectively zero.
• B) of the lack of market price regulations and guidelines.
• C) software producers serve niche businesses sectors with high profit margins.
• D) software development is a one-time process with no upgrade costs.
• E) software firms benefit from special tax exemptions that aid profitability.

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Definitions:

Bonds

Bonds are financial instruments representing a loan made by an investor to a borrower, typically corporate or governmental, which pays interest over time and returns the principal at maturity.

Effective Yield

The total yield on an investment, taking into account the compounding of interest, as opposed to just the nominal rate.

Bond Issue Costs

Expenses associated with the issuance of bonds, including legal fees, printing costs, and commissions, that are typically amortized over the life of the bonds.

Financial Statements

Documents that report on a company's financial performance, position, and cash flows, typically including the balance sheet, income statement, and cash flow statement.