You Are Selling a New Line of T-Shirts on the Boardwalk

question 63

Multiple Choice

You are selling a new line of t-shirts on the boardwalk. The selling price will be $25 per shirt. The labor cost is $5 per shirt. The administrative costs of operating the company are estimated to be $60,000 annually and the sales and marketing expenses are $20,000 a year. Additionally, the cost of materials will be $10 per shirt. What is the break-even quantity?

• A) 2,000 shirts
• B) 3,200 shirts
• C) 5,334 shirts
• D) 8,000 shirts
• E) 16,000 shirts

Understand the Arbitrage Pricing Theory (APT) and its comparison with CAPM.

Explain the practical applications and limitations of CAPM in financial decision-making.

Analyze how changes in risk aversion impact the security market line (SML) and stock prices.

Understand the concept of arbitrage and its role in ensuring market efficiency.

---

Definitions:

Rectangular Coordinate

A system of specifying points on a plane using two distances, typically known as the x and y coordinates, which define the position relative to two perpendicular axes.

Square

To multiply a number by itself, or a geometric figure with four equal sides and four right angles.

Y-axis

The vertical line in a coordinate plane that measures the second coordinate of a point (its ordinate).

X-axis

The x-axis is the horizontal axis in a coordinate plane, used to represent one dimension of data or to plot the values of a function.