CLEP Marketing

Answer: E - Market-based pricing is sometimes also called arm’s length pricing. This is because this type of pricing happens between distant (or arm’s length) parties. The main goal of transfer pricing is to make sure that a corporation gains profits at all stages of international transactions. A market-based transfer pricing strategy will allow these companies to purchase goods at low prices even from subsidiaries. An international marketing company’s market prices will be lower than the full cost of foreign pricing; thus, the pricing will favor market-based strategies.