Answer:
Economy type Expected return Weightage Weighted Average
Boom 14% 10% 0.14*0.10= 0.014
Normal 9% 85% 0.85*0.090=.0765
Recession -8% 5% -0.08*0.05=-0.004
Add all the weigtage averages (0.014+0.0765-0.004)= 0.0865= 8.65%
The expected rate of return of the stock is 8.65%
Explanation:
In this question we need to find the weighted average returns, we know the expected return during a boom, normal and recession and we need to use the probabilities of boom, normal and recession as the weights, so the event which is most likely to happen will have the most weightage, this way we can find the expected return of the stock. There is a 85% chance that there will be a normal economy so the expected return in a normal economy will have the highest weightage.
The difference between nominal GDP and real GDP is; A. nominal GDP measures actual productivity B. nominal GDP adjusts for inflation C. real GDP adjusts for inflation D. real GDP excludes imports and exports
Answer:
C. real GDP adjusts for inflation
Explanation:
Real GDP is a measure of a countries production in a given year adjusted for inflation. Real GDP is expressed in base-year prices. It measures inflation since the selected base year. Real GDP provides a more accurate measure of output as it considers changes in prices level. Without real GDP, a country GDP may appear to be growing, whereas its prices that have increased.
Nominal GDP is a valuation of all goods and services produced in a country in a given year using the current prices. The nominal GDP figure is usually higher that of real GDP as it incorporates both growth and prices.
Nominal GDP measures the value of output in current prices, while real GDP adjusts for inflation by measuring the value of output in constant prices.
Explanation:The difference between nominal GDP and real GDP is that nominal GDP measures the value of a nation's output of goods and services in current prices, while real GDP adjusts for inflation by measuring the value of output in constant prices. Nominal GDP can increase due to rising prices, even if the level of output remains the same. On the other hand, real GDP provides a more accurate measurement of the actual level of output by adjusting for changes in prices.
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Maple Industries has 7 percent bonds outstanding that mature in thirteen years. The bonds pay interest semiannually and have a face value of $1,000. Currently, the bonds are selling for $1,021.16. What is the firm's pre-tax cost of debt?A. 6.75%
B. 6.84%
C. 6.91%
D. 7.03%
E. 7.14%
Answer:
A. 6.75%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,021.16
Future value or Face value = $1,000
PMT = 1,000 × 7% ÷ 2 = $35
NPER = 13 years × 2 = 26 years
The formula is shown below:
= Rate(NPER,PMT,-PV,FV,type)
The present value come in negative
So, after solving this, the pretax cost of debt is 6.75% (3.38% × 2)
The correct answer is:
**B. 6.84%**
To calculate the firm's pre-tax cost of debt, we need to determine the yield to maturity (YTM) of the bonds. The YTM is the interest rate that equates the present value of the bond's future cash flows to its current price.
Given:
- Coupon rate[tex](\( C \))[/tex]: 7% annually, which is 3.5% semiannually.
- Face value[tex](\( F \))[/tex]: $1,000.
- Current price [tex](\( P \))[/tex]: $1,021.16.
- Time to maturity [tex](\( T \))[/tex]: 13 years, which is 26 semiannual periods.
The formula to calculate the YTM involves solving for \( r \) in the bond pricing equation:
[tex]\[ P = \sum_{t=1}^{n} \frac{C}{(1 + r)^t} + \frac{F}{(1 + r)^n} \][/tex]
Where:
- ( P ) is the current price of the bond ($1,021.16).
- ( C ) is the semiannual coupon payment ($1,000 \times 0.035 = $35).
- ( F is the face value of the bond ($1,000).
- ( n ) is the total number of semiannual periods (13 years \(\times\) 2 = 26).
- ( r ) is the semiannual yield to maturity.
Steps to Calculate YTM:
1. Set up the bond pricing equation:
[tex]\[ 1,021.16 = \sum_{t=1}^{26} \frac{35}{(1 + r)^t} + \frac{1,000}{(1 + r)^{26}} \][/tex]
2. Use a financial calculator or an iterative method to solve for \( r \). Alternatively, we can approximate \( r \) using a spreadsheet or a financial calculator function for bond YTM.
Calculation Using a Financial Calculator:
1. Input the following values into the financial calculator:
- Present Value (PV): -1021.16 (negative because it's an outflow)
- Future Value (FV): 1000
- Coupon Payment (PMT): 35
- Number of Periods (N): 26
2. Compute the YTM.
Using these inputs, solving for \( r \) (the semiannual yield to maturity) yields approximately 3.42% per semiannual period.
Convert Semiannual Yield to Annual Yield:
[tex]\[ \text{Annual YTM} = 3.42\% \times 2 = 6.84\% \][/tex]
Thus, the firm's pre-tax cost of debt is approximately 6.84%.
The correct answer is:
**B. 6.84%**
Richard Anderson, an entrepreneur residing in Arizona, noticed that many of his friends and neighbors complained of the intense heat during the summer months. In order to make the heat more bearable, Anderson developed and marketed a simple cooling system that sprayed a fine mist of water into the air. The system attached easily to patio roofs, backyard fences, and even golf carts. Since introducing the product on the market, Anderson has discovered that relatively large changes in the price of the system lead to relatively small changes in demand for his product. The demand for Anderson's product is:
Answer:
Inelastic
Explanation:
When the price elasticity of demand (PED) is lower than 1, the demand is said to be inelastic. This means that a 1% increase in the price of a good or service will result in a proportionally smaller reduction of the quantity demanded. The formula for calculating price elasticity of demand is:
PED = % of change in quantity / % of change in price
For example, if the price of gasoline increases by 5% but the quantity demanded for gasoline decreases only by 2%, the PED = 2% / 5% = 0.4, therefore the demand for gasoline is inelastic.
Disney starts off its stars with Disney Channel shows, records them on the Disney-owned Hollywood Record label, plays the songs in heavy rotation on Radio Disney and Disney movie soundtracks, organizes concert tours with Disney-owned Buena Vista Concerts, and sells tie-in merchandise throughout Disney stores. The goal of each of these elements isa. interest.
b. aided recall.
c. lagged effect.
d. brand awareness.
d. top-of-mind awareness
Answer: Option (D)
Explanation:
Here, in this particular case we can state that the goal of these elements introduced by Disney is to evaluate the top-of-mind awareness. This concept is referred to as one of the most important element of consumer behavior and marketing research. Disney uses this concept as a measure in order to known how is the brand ranked in the minds of their customers.
Answer:
D. top-of-mind awareness
Explanation:
The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to the destruction of the grazing resource. To correct this problem, the town could _____.
a. allow individual shepherds to choose their own flock sizes.
b. internalize the externality by subsidizing the production of sheep's wool.
c. auction off a limited number of sheep-grazing permits.
d. wait until the market corrects the problem.
The town could auction off a limited number of sheep-grazing permits to solve the problem.
What is a Tragedy of the Commons?This refers to a situation where people with free access to a public resource acts in their own interest and deplete such resource.
In order to prevent these commons tragedy, there will be need for the town officials to auction off a limited number of sheep-grazing permits to solve the problem.
Therefore, the Option C is correct.
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Suppose the production of a particular good causes a negative externality. Based on market forces only, how will this impact the production levels for a factory if negative externalities are present? A. It will produce the good below the socially efficient level. B. It will produce the same level regardless of whether externalities are present. C. It will produce the good above the socially efficient level. D. Negative externalities do not impact production levels.
Answer:
C. It will produce the good above the socially efficient level.
Explanation:
The socially efficient level of production is reached where marginal/total costs of production equals marginal/total benefits of production.
A negative externality is a cost that is not reflected in the price of goods if left to market forces alone.
Therefore, producers will over-supply to the level where the only their costs of production (equals total social costs minus cost of negative externality) equals total benefits to society (indicated by demand).
The following selected data are from a recent statement of cash flows: Net cash flow from operating activities $35,000 Net cash flow used for investing activities (20,000) Net cash flow from financing activities 60,000 Ending cash balance 100,000 What was the beginning cash balance? a.$75,000 b.$(25,000) c.$65,000 d.$25,000
Answer:
d.$25,000
Explanation:
Amount ($)
Cash provided by operating activities 35,000
Cash used by investing activities (20,000)
Cash used by financing activities 60,000
Net Increase (Decrease) in cash balance (a) 75,000
Cash at the beginning of the year (c=b-a) 25,000
Cash at the end of the year (b) 100,000
The beginning cash balance is $25,000
On August 3, Marley's Sporting Goods accepted a six-month promissory note from J.J. Brown, who owed $490 on account. (J. J. had needed more time to pay his balance.) The promissory note had a 10 percent interest rate. The journal entry on August 3 to record the transaction would be:
Answer:
Dr Notes Receivables account 490
Cr Accounts Receivables account 490
Explanation:
Notes receivables is debited since it increases, and when assets increase they are debited.
Accounts receivables is credited sin it decreases, and when assets decrease they are credited.
The journal entry cannot record the $49 in interest revenue since revenue cannot be recognized until it is earned or its earning process is substantially completed. Considering that Brown is not a very good client, the company is not even sure that it will be able to collect the original $490.
If Brown really pays the note, then the journal entries would be:
Dr Cash account 539
Cr Notes Receivables account 490
Cr Interest revenue 49
Which of the following will generate an increase in aggregate demand? A. Government spending for the onset of a war. B. An increase in the foreign exchange value of the dollar. C. A decrease in the price level. D. A tax increase.
Answer:
A. Government spending for the onset of a war.
Explanation:
If government spending increases, money supply would increase. When money supply increases, people would have more money and as a result, demand would increase.
A rise in foreign exchange value makes goods and services more expensive to foreigners and therefore export would fall and so would aggregate demand.
A decrease in price level would lead to an increase in aggregate output demanded.
A rise in tax would reduce disposable income and aggregate demand would fall.
The demand for labor depends primarily on the additional output produced as a result of hiring an additional worker and
Answer:
the additional revenue that the company will receive from selling the extra output produced by hiring the additional worker. This additional revenue is calculated by simply multiplying the total additional output times the sales price of each units of additional output.
As long as the additional revenue received is higher than the marginal cost of hiring an extra worker, the company will continue to hire more workers.
travel organization organizes a trip to London. The price changes based on the number of applicants. The following program is used to display the price of the trip and uses the variable Applicants which is set to the number of applicants for the trip. If the number of applicants is 60, what will be displayed?
Answer:
The correct answer is: Trip's price = $250.
Explanation:
According to the number of applicants, it is estimated that the price that can be charged to people is $ 250. If you wanted to charge even less, the trip could not take place because you would not meet the breakeven point.
It should be known that in addition to the above, a profit margin is calculated that is understood as the percentage that the organizer has left for the trip.
Which of the following is true of manufacturing?
a. It does not require an organizational strategy.
b. It creates products that cannot be quantified.
c. It creates time utility for its customers.
d. It transforms resources into tangible outcomes.
Suppose Juniper Natural Dyes, Inc., had sales of $ 220 comma 000 and estimated refund liability of $ 16 comma 000. Cost of goods sold was $ 110 comma 000. How much gross profit did Juniper Natural Dyes, Inc., report?
Answer:
$94,000
Explanation:
Given:
Sales = $220,000
Sales return (refund liability) = $16,000
Cost of goods sold = $110,000
Now,
Net sales = Sales - Sales return
Net sales = $220,000 - $16,000
Net sales = $204,000
Gross profit can be calculated as:
Gross profit = Net sales - Cost of goods sold
Gross profit = $204,000 - $110,000
Gross profit = $94,000
Carol uses a high-speed internet connection at home. Her connection is supported by the television line, but it does not interfere with the television signal. Carol uses a(n) ________ connection.
Answer: Cable connection
Explanation: cable connection is an internet connection that uses TV cable lines through a cable modem.
This type of connection has a cable speed of 512 to 20 Mbps.
Cable connection has a faster internet connection.
Due to various research, cable connection is not in use. Presently the use of WiFi is being used more now.
The __________ stage of the managerial decision-making process involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out.
The implementation stage of the managerial decision-making process involves using managerial, administrative, and persuasive abilities to carry out the chosen alternative.
Explanation:The implementation stage of the managerial decision-making process involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out. During this stage, managers put their plans into action and oversee their execution. They allocate resources, assign tasks, monitor progress, and address any obstacles that may arise.
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The implementation stage of the managerial decision-making process involves carrying out the chosen solution using managerial, administrative, and persuasive abilities. Success at this stage depends on the quality of decision making in previous stages - strategy and solution.
Explanation:The implementation stage of the managerial decision-making process involves the use of managerial, administrative, and persuasive abilities to ensure that the chosen alternative is carried out. In this stage, a specific solution that has been approved after careful deliberation and informed by practical wisdom and experience is put into action. The manager needs to ensure that the decisions taken are being followed and the desired results are being achieved. This stage often requires a leader who can direct, coordinate, and motivate the team to carry out the chosen solution. It's essential in the later phases of problem-solving to be able to claim credit for solutions, ensuring success rates and boosting team morale. The effectiveness of this stage is significantly dependent on the quality of decision making made in prior stages - strategy and solution.
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Because advertising is often designed to add ________ value to a product or brand, it plays a more important communications role in marketing consumer products than it does for marketing industrial products
Answer:
Psychological value
Explanation:
Psychological value :
In psychology Value alludes to the relative significance that an individual places on a thing, thought, individual.
The term value has two related at this point particular implications. In its social-mental significance, conversely, a worth is a dynamic, attractive end express that individuals take a stab at or plan to maintain, for example, opportunity, dedication, or convention.
John, Lesa, and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits, in accordance with his contribution. Lesa and Tabir, however, assume that the profits will be divided equally. A dispute over the profits arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place? Discuss fully.
Answer:
Most states don't require limited liability companies (LLCs) to have operating agreements that regulate how profits will be distributed.
Since their LLC doesn't have an operating agreement, then the valid state law will rule how the profits will be divided. Generally speaking, but not always, state laws regarding LLCs divide profits equally among its members.
This could all have been avoided if the would have made an operating agreement before starting to work. Now probably the LLC will be dissolved.
The court will apply state LLC statutes, which usually result in equal division of profits unless the LLC's operating agreement states otherwise. Disputes over profit division could be avoided by drafting a clear operating agreement at the business's formation.
Explanation:When John, Lesa, and Tabir formed a limited liability company (LLC) and disagreed on the distribution of profits, the court will likely apply state LLC statutes to solve the profit allocation dispute. In most states, unless the LLC's operating agreement specifies otherwise, profits are typically divided equally among members regardless of capital contribution. This standard can vary, though. An operating agreement should have been created during the formation of the LLC that explicitly stated how profits would be divided. Moreover, in a traditional partnership, each partner might be responsible for the business's debts and could lose personal assets in a bankruptcy or lawsuit. However, an LLC provides the benefit of limiting the partner's liability to their investment in the company, thus helping to protect personal assets.
To avoid such disputes, it is essential to have a detailed operating agreement that covers profit distribution, among other governance issues, which is agreed upon by all members at the inception of the business.
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Which of the following is a limitation of a process layout?
a. It affects the entire system if any equipment in the layout fails.
b. It has higher worker skill requirements.
c. It has highly specialized equipment requirements.
d. It generally requires a low investment for the production of machines.
Answer:
b. It has higher worker skill requirements.
Explanation:
In a process layout or functional layout, all machines and equipment of same functional use or type are placed in a particular and distinct department from machines and equipments of different functional use or type. In simple words, one type of machines are placed in a different space together. For instance, welding machines are together placed in welding department, grinding machines and equipment are placed in grinding department and so on.
Process layout uses the equipments and machines that are already within the process, it just places it differently and no specialized equipment are needed.
Machines and equipments require high and long term investments and the machines and equipments used in process layout are exactly the same.
The limitation of a process layout is that it has higher worker skill requirements due to the specialized nature of each department or process within the layout.
Explanation:The question "Which of the following is a limitation of a process layout?" pertains to how production processes are organized in manufacturing and service operations. Among the options provided, the correct answer is b. It has higher worker skill requirements. A process layout, also known as a job shop layout, is organized around specific processes or functions and is commonly used in operations where a variety of products or services are produced. This layout type faces the limitation of requiring workers with a higher skill set because each process or department specializes in a different operation, necessitating the ability to handle diverse tasks and equipment. This contrasts with other layouts, like a product layout, where tasks are more repetitive and can be performed with less specialized skills.
In a crosstabulation
a. either or both variables can be categorical or quantitative.
b. both variables must be quantitative.
c. one variable must be categorical and the other must be quantitative.
d. both variables must be categorical.
Answer: D - both variables must be categorical
Explanation: Crosstabulation is a technique used in the examination of 2 categorical variables. It is also known as contingency table analysis.
Crosstabulation is an analytic and useful tool in marketing research.
It creates a good relationship between the variables with its unique naming. its variables have a low chance of standing alone.
In a crosstabulation, d. both variables must be categorical.
Crosstabulation, also known as a contingency table or cross-tab, is a statistical tool used primarily to analyze the relationship between two or more categorical variables.
Categorical Variables are variables that take on a limited number of distinct values, separating data into different categories. Examples include gender (male/female), type of car (sedan/SUV), or color (red/blue/green).Quantitative Variables are numerical and can be discrete (countable) or continuous (measurable). Examples include age, height, and number of students in a class.When using crosstabulation, each cell in the table represents the frequency count of occurrences for a combination of values from the two categorical variables.
Commodity money is:
a. money with intrinsic value.
b. receipts created in international trade that are used as a medium of exchange. c. the principal type of money in use today.
d. backed by gold.
Answer:
Money with intrinsic value.
Explanation:
Commodity money is a money which posses intrinsic value of of its own. It value depend on the commodity of which it is made of. This has been used as medium of exchange, it include Gold, silver, copper, cocoa beans, barley, etc. It is opposite to the fiat money, which is intrinsically useless. Value of commodity money is independent of government control.
The institution-based view driving alliances and acquisitions focuses on _____ concerns.
a. antitrust
b. learning by doing
c. rarity
d. value
Answer: (A) Antitrust
Explanation:
Antitrust is one of the type of law that basically monitor the economical power distribution in terms of business.
It is basically refers to the competitive law which is developed by the united state government for protecting the consumers from the various types of business practices.
It mainly ensure that the fairness in the competition in the market. Antitrust concerns are mainly focus on the institutional acquisitions and the alliances.
Therefore, Option (A) is correct.
Cargo, such as trucks, that cannot be containerized because it is too large and won't fit in a traditional container or because it exceeds the maximum weight of a container load is called_______
A. loose cargo
B. LCL cargo
C. breakbulk cargo
D. moderated cargo
E. project cargo
Answer:
C. breakbulk cargo
Explanation:
Based on the information provided within the question it can be said that this type of cargo is called breakbulk cargo. Like mentioned in the question, this type simply refers to general cargo that does not fit into traditional shipping containers or cargo bins, or exceeds the weight maximum for containers and must be shipped separately. Such cargo can include oversized vehicles, boats, cranes, turbine blades, ship propellers, generators, or even large engines.
C. breakbulk cargo
heh hope i helped
What is one difference between a firm in a perfectly competitive industry and a firm in a monopolistically competitive industry?
A) A monopolistically competitive firm does not face a downward-sloping demand curve.
B) A monopolistically competitive firm faces competition from firms producing close substitutes.
C) A monopolistically competitive firm is guaranteed to make more than normal profits in the long run.
D) A monopolistically competitive firm does not choose a level of output where marginal cost is equal to marginal revenue.
Final answer:
A monopolistically competitive firm faces competition from firms producing close substitutes, while a firm in a perfectly competitive industry faces a flat or horizontal demand curve.
Explanation:
A monopolistically competitive firm differs from a firm in a perfectly competitive industry in that a monopolistically competitive firm faces competition from firms producing close substitutes. This means that there are multiple firms offering similar products, giving consumers more options to choose from.
In contrast, a firm in a perfectly competitive industry faces a flat or horizontal demand curve because it has many competitors selling identical products.
Brad and Kate received $9,500 for rent from Mike and Janet, who are renting their home in Santa Ana, California. Brad and Kate did not use this property for personal use. The rent covers eight months from August 1 of the current year to March 31 of the following year. The amount also includes a security deposit of $1,500. How much should Brad and Kate report as rental income in the current tax year?
a. $1,500
b. $5,000
c. $8,000
d. $9,500
Answer:
c. $8,000
Explanation:
The security deposit is usually refundable and NOT part of the rental income and, therefore, it should be deducted from the total amount received when reporting rental income for the tax year.
Thus, Brad and Kate should report $8,000 as rental income in the current tax year.
Daniel is resigning from his position as a marketing specialist and would like a permanent record of her official resignation. What is the best communication channel for his to resign and to inform her supervisor of her resignation?
a. Letter
b. E-mail message
c. Instant message
d. Test message
Answer:
a. Letter
Explanation:
A letter is written communication from one party to another. Letters are written on a designated paper, put in an envelope and send either by post or hand-delivered.
A letter can be formal or informal. Daniel should write a formal letter to his boss informing him of his resignation. Should Daniel write a letter, It will an official document in the company. The company will be file the document appropriately and will stay intact for many years.
Daniel can also keep a copy of the letter for himself. A letter has an advantage over the other electronic options. Electronic records can be deleted permanently or get lost should the systems collapse.
LO 3 Chad's Chocolates is considering the purchase of a new candy press. The machine under consideration costs $17,550 and would generate $2,650 in annual savings of direct labor costs over its 20-year life. At the end of 20 years, the press could be sold for $500. Chad's required rate of return is 16%. What is the machine's net present value?
A) $1,813
B) $(1,813)
C) $(1,839)
D) $(1,339)
Answer:
B) $(1,813)
Explanation:
Initial investment = 17,550
Annual cashflows = 2,650
Terminal Cashflow = 500
You can solve for NPV using financial calculator with the following inputs;
CF0= -17,550
C01 = 2,650
F01 (Frequency) = 19
C02 = 2,650 + 500 = 3,150
I=16%
Net present value; NPV = -1,812.879 or -1,813 rounded off to the nearest whole number.
The pizza delivery industry is monopolistically competitive. Little Joe's Pizzeria raises its prices by 10%, but all the other pizzerias in town keep their prices the same. Which of the following is most likely to occur?
a) Little Joe's Pizzeria will not be able to sell any pizzas, since it was the only firm to raise its price
b) Little Joe's Pizzeria profits will increase
c) Little Joe's Pizzeria will lose some of its customers
d) the number of customers served by Little Joe's Pizzeria will increase
Answer:
Option (C) is correct.
Explanation:
It was given that pizza industry is under the conditions of monopolistically competitive industry. The firms under monopolistic competitive industry are selling the similar products but these products are not perfect substitutes and the decision made by one firm do not affect directly the decision made by other firms in the industry.
Little Joe's raises the prices by 10%, so as a result demand for his pizza decreases because some of the individuals won't be able to afford that price. Hence, Little Joe's Pizzeria will lose some of its customers.
Final answer:
In a monopolistically competitive market like pizza delivery, Little Joe's Pizzeria will likely lose some of its customers if it raises its prices by 10% while competitors maintain their prices.
Explanation:
In a monopolistically competitive industry like pizza delivery, where Little Joe's Pizzeria operates, firms have some market power due to product differentiation, but there are many close substitutes available. If Little Joe's Pizzeria decides to raise its prices by 10% while all other pizzerias keep their prices the same, it's most likely that Little Joe's Pizzeria will lose some of its customers to competitors.
This outcome is because customers can easily switch to other pizzerias that offer similar products at a lower price. The loss of customers would occur even with differentiated products, as price differences are significant enough to drive consumers to look for alternatives. This tendency aligns with the concept of a firm's perceived demand curve in monopolistic competition, which is downward sloping—indicating that as prices increase, quantity demanded decreases.
The first step in selecting a target market is to study the industry in which the firm intends to compete and determine the different potential target markets in that industry. This process is called:
A) market positioning
B) market splitting
C) market targeting
D) market subdividing
E) market segmentation
Answer:
Letter E is correct. Market segmentation.
Explanation:
Market segmentation is an effective marketing tool in identifying the target audience. In this process, the potential customers market is divided into groups according to individual characteristics and similarities in preferences, interests, needs, location and others. Segmentation is also performed according to the response to the marketing strategies used.
There are several added benefits for an organization that uses market segmentation, such as the ability to customize marketing campaigns according to the characteristics of each group, reducing costs, time and risks.
The essence of the ________ explanation to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity, otherwise it should not vertically integrate into that activity.
Answer: The correct answer is "Firm capability"
Explanation: The essence of the firm capability explanation to vertical integration is that if a firm possesses valuable, rare, and costly-to-imitate resources in a business activity, it should vertically integrate into that activity, otherwise it should not vertically integrate into that activity.
When making investment decisions, investors
a. compare the real interest rates offered on different bonds.
b. compare the nominal, but not the real, interest rates offered on different bonds.
c. purchase the highest-priced bond available.
d. All of the above are correct.
Answer:
The answer is a. that is, we have to compare real interest rates offered on various bonds being offered.
Explanation:
As making investment decisions, investors should take into account the implicit costs of lending they incur once they lend the fund to the bond issuer instead of only paying intention to nominal interest rate denoted in a bond. One of the major implicit cost is the cost arisen from the weakening of money's purchasing power over time - that is, inflation cost.
In other words, real interest rate, that is, the interest rate that already takes into account the effect of inflation ( the percentage of money's value losses over time), should be used for investment decisions rather than the nominal rate stipulated in each bond.