The Internet Allows Customers to Compare Prices of Many Goods

question 338

Multiple Choice

The Internet allows customers to compare prices of many goods and services.This technology will likely:

• A)cause businesses to increase their focus on non-price aspects of their promotional message.
• B)bring about more emphasis on demand-oriented pricing.
• C)diminish in importance as quickly as other fads.
• D)focus government attention on the collusive pricing practices of firms in specific industries.

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Definitions:

Inflation Premium

The extra yield that investors demand on securities to compensate for the risk of inflation reducing the value of future cash flows.

Fisher Effect

The Fisher Effect describes the relationship between nominal interest rates, real interest rates, and inflation, asserting that the nominal interest rate is equal to the real interest rate plus inflation.

Interest Rate Risk

The risk of changes in interest rates that can adversely affect the value of an investment.

Term Structure

The relationship between interest rates or bond yields and different terms or maturities, depicted in a curve.