Zoe Is an Executive at Dell Computer Company Who Is

question 118

Multiple Choice

Zoe is an executive at Dell Computer Company who is in charge of designing the next version of laptop computers. She will consider such features as screen size, weight, processor speed, and CD and DVD drives. Given the fact that it is costly to include more features in new products, why might Zoe be interested in data on how much consumers paid for a range of laptops with different attributes?

• A) in order to estimate willingness to pay for each feature.
• B) in order to set an optimal price for the laptops.
• C) in order to determine the best features to include.
• D) in order to estimate willingness to trade off one feature for another.
• E) all of the above

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Definitions:

Credit Risk

The risk that the bond will not make all of its promised payments; default risk.

Swap Market

A market in which individuals, businesses, and institutions exchange financial instruments, like interest rates or currencies.

Fixed Rate

An interest rate that remains constant over the life of a loan or investment.

Portfolio's Beta

A measurement of the volatility or systematic risk of a portfolio in comparison to the market as a whole.