Although many factors can influence price, what are the primary determinants?
a. the demand for the good and the cost to the seller
b. demand by the consumer and perceived quality
c. stage of the product life cycle and costs to the consumer
d. costs of manufacturing and distribution
Answer: a. the demand for the good and the cost to the seller
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A one-year zero-coupon bond yields 4.0%. The two- and three-year zero-coupon bonds yield 5.0% and 6.0% respectively. The one-year spot rate r(1) = 5% and the forward price for a one-year zero-coupon bond beginning in one year is 0.9346. The spot price of a two-year zero-coupon bond is closest to:
A. 0.87. B. 0.89. C. 0.93.
Assuming g will stay constant, the dividend yield is a good measure of the required return on a common stock under which of the following circumstances?
A) g = 0 B) g > 0 C) g < 0 D) Never