Cool Deal, a Soft-Drink Company Extended Its Brand Name to Include

question 64

Multiple Choice

Cool Deal, a soft-drink company extended its brand name to include soaps.Cool Deal did not succeed in selling its soaps and, as a result, sales of its core brand also declined.It took Cool Deal considerable effort to regain customers who had turned to other soft drinks.This is an example of:

• A)cobranding.
• B)brand equity.
• C)brand licensing.
• D)brand extension.
• E)brand dilution.

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Definitions:

Weighted Average Cost Of Capital

The average rate that a company is expected to pay to all its security holders to finance its assets.

Stock Price

The cost of purchasing a share of a company in the stock market, subject to fluctuations based on supply and demand.

Operating Risk

The risk of loss arising from the day-to-day operations of a business.

Cost Of Capital

A measure of the return required by investors to compensate them for the risk of investing in a company.