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The Nation's Largest Cable TV Company Tested the Effect of a Price

question 3

Multiple Choice

The nation's largest cable TV company tested the effect of a price reduction for premium movie channels. It lowered prices from $12 to $9.95 and found that the number of customers rose by almost 50 percent. What does this illustrate?


Definitions:

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability per share.

Price-Earnings Ratio

A financial metric used to evaluate a company's share price relative to its earnings per share, helping investors assess the market value of a stock.

Times Interest Earned

is a financial ratio that compares a company's income before interest and taxes (EBIT) to its interest expenses, indicating how well the company can cover its interest obligations.

Debt-To-Equity Ratio

A formula displaying the relative use of debt and equity from shareholders in the financial strategy for a company's assets.

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