For Diversification to Reduce Risk

question 1

Multiple Choice

For diversification to reduce risk,

• A)the returns on the individual securities should be highly correlated
• B)the prices of the stocks should be stable
• C)the returns on the individual securities should be negatively correlated
• D)one firm should offer dividends and the other should offer capital gains

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Definitions:

Yield Management Pricing

A variable pricing strategy, based on understanding, anticipating, and influencing consumer behavior, to maximize revenue from a fixed, perishable resource.

Uniform Delivered Pricing

A pricing strategy where a company charges the same price to deliver a product anywhere in a specific geographical area.

Pricing Methods

Strategies and approaches used by companies to set the sales price of their products or services.

Seasonal Discounts

Price reductions offered during certain times of the year to stimulate sales during off-peak seasons.