General Motors Prices Its Automobiles to Achieve a 15 to 20

question 150

Multiple Choice

General Motors prices its automobiles to achieve a 15 to 20 percent profit on its investment.This approach is called .

• A)going- rate pricing
• B)target- return pricing
• C)cost- plus pricing
• D)value- based pricing
• E)low- price image

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Definitions:

Expiration Date

In finance, this term often refers to the date on which a derivative contract, such as an option or futures contract, becomes void and ceases to trade.

Option Contract

A financial derivative contract that grants the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a certain date.

Exercise Price

The price at which the holder of an option can buy or sell the underlying security.

European Calls

Options contracts that allow the buyer to purchase a stock or asset at a specific price on or before the expiration date, but only on that date.