Many companies commit to the use of one type of operating system for their computers, for example the use of Microsoft Office. From the perspective of the office software industry, what type of barrier to entry does this represent?

1. Capital requirements

2. Supply-side economies of scale

3. Demand-side economies of scale

4. Customer switching costs

Which of the following is NOT one of the key reasons why the assumed objective for management is to maximise share price as opposed to maximising profit?

1. The companys profit must be evaluated relative to the total assets of the company

2. The companys profit must be evaluated relative to the companys level of risk

3. The company needs to consider social issues as well as economic performance

4. The value of common shares is based on the companys performance over multiple years

Which of the following statements is TRUE about the importance of understanding the decisions that management makes when estimating the intrinsic value of the company that they work for?

1. Failing to understand how management makes decisions may lead to them making unethical decisions

2. Failing to understand how management makes decisions may lead to them undertaking risky projects

3. Managements decisions ultimately determine the profitability and risk of the company

4. Failing to understand how management makes decisions may lead to the market becoming inefficient