Table 15.2.7 Refer to the Table Below to Answer the Following Questions

question 32

Multiple Choice

Table 15.2.7

Refer to the table below to answer the following questions.
-Refer to Table 15.2.7.Disney and Fox must decide when to release their next films.The revenues received by each studio depends in part on when the other studio releases its film.Each studio can release its film at Thanksgiving or at Christmas.The revenues received by each studio,in millions of dollars,are given in the payoff matrix above.Which of the following statements correctly describes Fox's strategy given what Disney's release choice may be?

• A)If Disney chooses a Thanksgiving release, Fox should choose a Christmas release.
• B)If Disney chooses a Christmas release, Fox should choose a Thanksgiving release.
• C)Fox should release on Christmas regardless of what Disney does.
• D)Fox should release on Thanksgiving regardless of what Disney does.
• E)Both answers A and B are correct.

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Definitions:

Effective Annual Rate

The actual return on an investment or the real rate of interest on a loan, taking into account the effect of compounding over a period.

Amortized Loan

An amortized loan is a loan where the principal is paid down over the life of the loan, typically through equal payments.

Present Value

The equivalent value today of cash flows or a sum of money anticipated in the future, using a predetermined return rate.

Annuity

A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.