Setting a Price Relatively High Compared to Similar Goods and Then

question 51

Multiple Choice

Setting a price relatively high compared to similar goods and then gradually lowering it is a pricing strategy called _____ pricing.

• A)penetration
• B)skimming
• C)cost-based
• D)psychological

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Definitions:

Yield To Maturity

The total return anticipated on a bond if it is held until the end of its lifetime, accounting for interest payments and price changes.

Modified Duration

A formula that predicts the change in a bond's price for a 1% change in interest rates, considering the bond's yield to maturity.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, equal to 0.01%.

Declining Interest Rates

A situation in which the general level of interest rates in the economy is decreasing, affecting borrowing costs, investment returns, and economic activity.