A Technology Company Has Just Begun to Make a Profit

question 26

Multiple Choice

A technology company has just begun to make a profit on its DVD-R discs (DVD discs in a recordable format) . Its promotional expenditures are aimed at trying to persuade potential customers of the merits of its DVD-R discs. Even more money is being spent to develop the firm's distribution system for its DVD-R discs. Since
Apple's iMac now comes with a DVD recorder as a standard part, a few other companies have started producing DVD-R discs for the market. What stage of the product life cycle is the DVD-R in?

• A)maturity stage
• B)growth stage
• C)decline stage
• D)commercialization stage

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Definitions:

Total Risk

The complete range of risks involved in an investment, encompassing both systematic and unsystematic risks.

Expected Return

The anticipated amount of profit or loss an investment is expected to generate over a given period.

Securities

Financial instruments that represent ownership positions in corporations (stocks), creditor relationships with corporations or governmental bodies (bonds), or rights to ownership as represented by an option.

Capital Allocation Line

A line on a graph that shows the risk-reward ratio of portfolios that combine a risk-free asset and a risky portfolio.