Store Frequently Show Items for Sale with a Price That

question 113

Multiple Choice

Store frequently show items for sale with a price that appears to be reduced. Former price comparisons are deceptive if

• A) the high price tags were from a previous owner or retailer and were purchased that way from the reseller, even though that price didn't originate at the store.
• B) the items for sale were part of a manufacturer's promotional allowance.
• C) a high price was set for the purpose of establishing a reference for a price reduction.
• D) the items for sale were available at the higher price for less than 30 days.
• E) the items were purchased from the manufacturer at a higher price and the sale was part of a loss-leader promotion.

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Definitions:

Market Proxy

A stock market index or a similar benchmark used to represent the overall movement of the market.

Mean/Variance Efficient

Describes a portfolio that offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

CAPM

Stands for Capital Asset Pricing Model, a formula used to determine the expected return on an investment based on its risk relative to the market.

Multifactor Model

An investment model that evaluates securities by considering multiple economic factors to predict their risk and return.